Bitcoin Surges Past $65K Following Moderated April CPI Inflation Data

The Bitcoin (BTC) price surged more than 5% back to the $65,000 level on Wednesday in wake of US CPI inflation data that showed moderating price pressures in April, supporting bets that the Fed will be able to ease interest rates a few times before the end of 2024.

The post Bitcoin Price Pumps 5% to $65K After CPI Data – Can BTC Break Out of Its Current Range? appeared first on rzmarketeer.blogspot.

In Detail:

On May 15, 2024, the Bitcoin (BTC) price experienced a significant surge, rising by more than 5% to reach the $65,000 mark. This jump followed the release of US Consumer Price Index (CPI) inflation data for April, which indicated easing price pressures. These numbers supported expectations that the Federal Reserve would relax interest rates a few times before the end of 2024.

According to data from CME, there is now a 71% probability of at least one interest rate reduction occurring by September. Just a day earlier, this likelihood stood at around 65%. The Bitcoin price now faces a critical technical hurdle represented by its 50-day moving average (MA) at $65,166. A breach of this MA and the previous highs around $65,500 could potentially pave the way for further short-term gains. Subsequent levels to observe closely would include the late April highs around $67,000, and beyond that, a retest of yearly highs approaching $73,000.

Recent fears of gradually escalating inflation in Q1 2024 proved to be a significant challenge for Bitcoin. Persistent inflation concerns compelled markets to abandon hopes for aggressive Fed rate reductions. As a consequence, Bitcoin struggled after touching new record highs near $74,000 ahead of the halving. Since then, the cryptocurrency has mainly traded within a consolidation range, oscillating between $60,000 and $70,000.

However, the latest inflation report, while not necessarily transformative, suggests that the Q1 inflation increase might not persist. Improvements in inflation concerns could turn macroeconomic factors into a medium-term tailwind for Bitcoin, contrasting with the previous headwind. Whether Bitcoin breaks free from its multi-month range depends on several factors. Historically, May has not been a kind month for Bitcoin, with declines recorded in 2021 (-35%), 2022 (-15.5%), and 2023 (-7%).

Nonetheless, the combination of cooling inflation data and an apparent readiness among investors to embrace riskier assets presents an interesting scenario for Bitcoin. Technical barriers aside, the psychological impact of surmounting the $65,000 threshold could attract additional buyers, catalyzing further price appreciation. At the time of writing, Bitcoin hovers near $65,200, having briefly touched $65,350 shortly after the release of the CPI data.