Bitcoin Price Surges 5% to $65K Following CPI Data – Will BTC Escape Its Current Range?
By Joel Frank
Updated: May 15, 2024, 12:55 EDT
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Reading Time: 2 minutes
The latest release of US Consumer Price Index (CPI) data has triggered a rally in the price of Bitcoin, propelling it towards significant resistance levels. Can BTC break free from its current trading range?
Bitcoin (BTC) experienced a surge of over 5%, reaching the $65,000 mark on Wednesday after the US CPI inflation data indicated a slowdown in price pressures during April. This has given investors confidence that the Federal Reserve will be able to lower interest rates multiple times before the end of 2024.
The increase in the price of Bitcoin coincided with a 0.9% rise in the S&P 500, which reached new all-time highs. Meanwhile, US bond yields and the US Dollar Index dropped to their lowest levels in a month.
Traders are currently most optimistic about the possibility of at least one interest rate cut by September, according to CME data. The data shows a 71% implied probability of a rate cut by September based on the money market.
Just a day ago, the market implied a 65% probability of at least one interest rate cut by September.
Bitcoin now faces a critical technical barrier at its 50-day moving average (DMA) of $65,166. If the price of Bitcoin breaks above this level and surpasses its May highs of around $65,500, there could be further short-term upside potential.
The next level to watch would be the late-April highs around $67,000. If Bitcoin surpasses that, the next target would be to retest the yearly highs in the $73,000 range.
The price of Bitcoin could potentially surge back to its yearly highs if it can overcome these key levels. Source: TradingView
Can Bitcoin Break Free from its Multi-Month Trading Range?
Concerns about a gradual increase in inflation in the first quarter of 2024 have hindered Bitcoin’s performance in recent months.
The persistent inflation at the beginning of 2024 led the market to discount the possibility of aggressive interest rate cuts by the Federal Reserve. This was likely the main reason why Bitcoin’s momentum stalled after reaching new record highs near $74,000 before the halving.
Since then, Bitcoin has been range-bound, trading mostly between $60,000 and $70,000. However, the latest inflation report suggests that the inflation bump in the first quarter may not be sustained.
If concerns about inflation subside going forward, the macroeconomic outlook could become a medium-term tailwind for Bitcoin rather than a headwind.
So, can Bitcoin break free from its multi-month trading range? Historically, May has not been a favorable month for Bitcoin.
According to bitcoinmonthlyreturn.com, Bitcoin experienced a 35% decline in 2021, a 15.5% decline in 2022, and a 7% decline in 2023. Steno Research also indicates that Bitcoin has performed poorly during the middle months of the year over the past five years.
Typically, post-halving rallies do not gain momentum until 4-6 months after the halving event. This suggests that a major upward push may not occur until after August.
However, 2024 could be different due to being an election year. Markets tend to rally leading up to elections, deviating from their usual bearish summer conditions.
The long-term price prospects for Bitcoin remain heavily skewed to the upside. Rate cuts, the halving event, ongoing government spending, and the demand for Bitcoin ETFs could potentially push BTC above $100,000 in 2024 or 2025.
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Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes only and does not constitute investment advice. You could lose all of your capital.