Bitcoin’s price experienced a significant surge of 7.50%, reaching $66,350, following the release of the latest US inflation data. The data showed that the US consumer price index (CPI) rose by 0.3% in April, slightly lower than the previous months. This suggests that inflation is continuing to decrease, leading to expectations of a potential interest rate cut by the Federal Reserve in September.
The CPI data is significant as it indicates a cooling inflation trend, which is a positive sign for the economy. The slower increase in consumer prices aligns with other data showing a flat retail sales growth in April, indicating a slowdown in domestic demand. This is welcome news for Federal Reserve officials who aim to achieve a “soft landing” for the economy without triggering a recession.
The key drivers of inflation were shelter costs, including rents, which increased by 0.4% for the third consecutive month, and gasoline prices, which jumped by 2.8%. These two categories accounted for over 70% of the CPI increase. In contrast, food prices remained unchanged, with notable decreases in supermarket prices for items like eggs, which dropped by 7.3%.
Year-over-year, the CPI increased by 3.4% in April, slightly down from 3.5% in March. This annual increase has significantly slowed down from its peak of 9.1% in June 2022. Economists had predicted a 0.4% monthly increase and a 3.4% year-over-year increase, indicating that inflation is moderating.
Federal Reserve Chair Jerome Powell stated that although inflation is decreasing slowly, he expects it to continue moving downward towards the Fed’s 2% target. As a result, financial markets now see a higher probability of a rate cut in September, with some economists even anticipating that the Fed may start lowering borrowing costs as early as July.
The expectation of a rate cut has had a positive impact on stock markets, with Wall Street trading higher, the dollar weakening against other currencies, and US Treasury prices rising. This economic environment has fueled a rally in Bitcoin’s price as investors seek alternative assets amidst changing monetary policies.
Currently, Bitcoin is trading at $66,350, up 7.50% according to a bullish Bitcoin price prediction. The 4-hour chart shows a strong bullish rally, with Bitcoin breaking out of a symmetrical triangle pattern around the $63,300 level. However, caution is advised as recent candlestick formations and an overbought RSI of 78 suggest potential market indecision and a forthcoming bearish correction.
Key price levels to watch include the pivot point at $65,150, which serves as a crucial support level. Immediate resistance is found at $67,300, with further resistance at $68,545 and $70,000. On the downside, immediate support is at $63,300, followed by $61,560 and $60,185. The 50-day Exponential Moving Average (EMA) at $62,565 also provides critical support, reinforcing the bullish trend.
In conclusion, the overall outlook for Bitcoin remains bullish above the $65,150 pivot point. However, a break below this level could trigger a sharp selling trend, targeting immediate support at $63,300. Investors should exercise caution and monitor the market closely.