BTC price movement options ahead of inflation data
July 12, 2023 12:23 pm
In the last few days, trading activity in the cryptocurrency market has significantly decreased. This is largely due to the forthcoming publication of the U.S. inflation report, which will determine the future policy of the Federal Reserve. Investors are not rushing to take active steps, as the trading activity in the BTC market has recovered, and therefore the risks associated with volatility have increased.
In June, short position holders across all markets collectively lost over $37 billion, a positive signal for the revival of the overall bullish trend. However, macro data in the coming months will play a crucial role. Investor reaction is expected to be particularly strong, which is why trading activity is quieting down ahead of the publication of the CPI data.
What do financial markets expect?
After Jerome Powell’s speeches to Congress and the Senate, investors began to prepare for a likely rate hike in July. On the CME, the number of those who believed in a 0.25% rate hike in July reached 77%. This figure increased when the Federal Reserve minutes were published, where members of the agency stated the need for several more hikes in the current cycle.
However, subsequently, we saw a significantly weakened labor market. The number of unemployment claims increased by 39% since the start of the rate hikes. Also, some Federal Reserve officials have said that a rate hike is permissible, but everything will depend on the specific CPI results. This gave investors hope that deflationary movement will maintain high momentum for June.
According to Dow Jones surveys, traders and analysts expect inflation to drop to 3.1% from the current 4%. Given the increasing economic data and a sharp drop in global economic liquidity, indicating a looming recession, markets will particularly painfully perceive slow deflationary movement and, as a result, a rate hike.
Scenarios for Bitcoin
If the CPI index for June decreases to 3.1% or lower, one can expect a surge in bullish volumes and another attempt by the cryptocurrency to break through the $31k–$31.5k zone. It is not possible to predict specific outcomes of this movement as it will depend on the specific strength of the impulse and investors’ readiness to develop a bullish surge.
Upon the release of the CPI index, which falls within the range of 3.2% to 3.5%, one should expect a moderately negative investor reaction and a decrease in trading activity in the following days. Such results imply a high probability of a key rate hike, and therefore, investors’ priorities will change again. In this case, BTC will test the support area at $29.8k with minimal chances of falling below it.
If the CPI index turns out to be above 3.5%, a serious downward movement should be expected, which will be supported by growing panic sentiment. In this case, a bearish breakthrough of the $29.8k level should be expected, and further price movement to $28.8k and below to $25.5k–$26.4k. In this scenario, it may be appropriate to raise the rate more than twice in 2023.
BTC/USD Technical Analysis
Bitcoin is successfully recovering above $30.5k, which is a positive factor, indicating the predominance of bulls. The asset’s technical indicators have also moved into the green zone, so Bitcoin does not show clear signs of being overbought.
At the same time, the technical indicators do not show signals to increase trading activity or readiness to implement a bullish jerk. This indicates investors’ desire to wait for the results of the U.S. inflation report.
A positive fact is also the active accumulation by all categories of investors, regardless of the macroeconomic situation. Glassnode reports that the number of addresses with different balances has been growing steadily since early June. Wallets with a balance from 1,000 to 10,000 BTC have accumulated over 90,000 BTC in the last 30 days.
Conclusions
Global financial markets are in limbo due to the upcoming publication of inflation reports. Despite this, Bitcoin continues to attract investors, and the active accumulation of BTC volumes by all categories of addresses confirms this. At the same time, CPI data and the Fed’s decision will be of key importance for the quotes of the main cryptocurrency.
The material has been provided by InstaForex Company – www.instaforex.com
In the last few days, trading activity in the cryptocurrency market has significantly decreased. This is largely due to the forthcoming publication of the U.S. inflation report, which will determine the future policy of the Federal Reserve. Investors are not rushing to take active steps, as the trading activity in the BTC market has recovered, and therefore the risks associated with volatility have increased.
In June, short position holders across all markets collectively lost over $37 billion, a positive signal for the revival of the overall bullish trend. However, macro data in the coming months will play a crucial role. Investor reaction is expected to be particularly strong, which is why trading activity is quieting down ahead of the publication of the CPI data.
What do financial markets expect?
After Jerome Powell’s speeches to Congress and the Senate, investors began to prepare for a likely rate hike in July. On the CME, the number of those who believed in a 0.25% rate hike in July reached 77%. This figure increased when the Federal Reserve minutes were published, where members of the agency stated the need for several more hikes in the current cycle.
However, subsequently, we saw a significantly weakened labor market. The number of unemployment claims increased by 39% since the start of the rate hikes. Also, some Federal Reserve officials have said that a rate hike is permissible, but everything will depend on the specific CPI results. This gave investors hope that deflationary movement will maintain high momentum for June.
According to Dow Jones surveys, traders and analysts expect inflation to drop to 3.1% from the current 4%. Given the increasing economic data and a sharp drop in global economic liquidity, indicating a looming recession, markets will particularly painfully perceive slow deflationary movement and, as a result, a rate hike.
Scenarios for Bitcoin
If the CPI index for June decreases to 3.1% or lower, one can expect a surge in bullish volumes and another attempt by the cryptocurrency to break through the $31k–$31.5k zone. It is not possible to predict specific outcomes of this movement as it will depend on the specific strength of the impulse and investors’ readiness to develop a bullish surge.
Upon the release of the CPI index, which falls within the range of 3.2% to 3.5%, one should expect a moderately negative investor reaction and a decrease in trading activity in the following days. Such results imply a high probability of a key rate hike, and therefore, investors’ priorities will change again. In this case, BTC will test the support area at $29.8k with minimal chances of falling below it.
If the CPI index turns out to be above 3.5%, a serious downward movement should be expected, which will be supported by growing panic sentiment. In this case, a bearish breakthrough of the $29.8k level should be expected, and further price movement to $28.8k and below to $25.5k–$26.4k. In this scenario, it may be appropriate to raise the rate more than twice in 2023.
BTC/USD Technical Analysis
Bitcoin is successfully recovering above $30.5k, which is a positive factor, indicating the predominance of bulls. The asset’s technical indicators have also moved into the green zone, so Bitcoin does not show clear signs of being overbought.
At the same time, the technical indicators do not show signals to increase trading activity or readiness to implement a bullish jerk. This indicates investors’ desire to wait for the results of the U.S. inflation report.
A positive fact is also the active accumulation by all categories of investors, regardless of the macroeconomic situation. Glassnode reports that the number of addresses with different balances has been growing steadily since early June. Wallets with a balance from 1,000 to 10,000 BTC have accumulated over 90,000 BTC in the last 30 days.
Conclusions
Global financial markets are in limbo due to the upcoming publication of inflation reports. Despite this, Bitcoin continues to attract investors, and the active accumulation of BTC volumes by all categories of addresses confirms this. At the same time, CPI data and the Fed’s decision will be of key importance for the quotes of the main cryptocurrency.
The material has been provided by InstaForex Company – www.instaforex.com
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