Bitcoin Surges 5% Amid Inflation News
Bitcoin witnessed a significant 5% surge, likely fueled by investor sentiment surrounding the latest inflation data. The Consumer Price Index (CPI) inflation figures for April indicate a slight decrease in inflation, with the annual rate slowing down to 3.4%.
The Bureau of Labor Statistics reveals that the decline in grocery and used car prices offset the increase in rent and gasoline costs. This report signifies a step forward in the fight against persistently high inflation, after an unexpected acceleration in the first quarter.
Core inflation, which excludes volatile food and energy components, reached a three-year low, sparking speculation among investors. This closely watched metric rose by 0.3% in April, down from the 0.4% increase in March. As a result, the annual core inflation rate dropped from 3.8% to 3.6%, reaching its lowest level since April 2021.
The moderation in core inflation has led market participants to speculate about the Federal Reserve’s next move on interest rates. Some analysts suggest that the central bank may consider pausing its aggressive rate hike cycle, considering the progress made in controlling inflationary pressures.
Barclays’ projections indicate that annual inflation could slow down to 3.1% by December, with the core CPI measure falling to 3.3%. However, these levels would still exceed the Fed’s target of 2%, creating a delicate balancing act for policymakers.
Amid ongoing economic uncertainties, Bitcoin has showcased its strength. The Relative Strength Index (RSI) suggests potential support against further declines, as Bitcoin defends the ascending trendline and aims to reclaim the $63,354 threshold. A breakthrough at $65,500 on the four-hour time frame could signal a shift in market structure, propelling Bitcoin towards the psychological level of $70,000.
In a bullish scenario, Bitcoin could revisit its all-time high of $73,777. The daily timeframe reveals that Bitcoin has been trapped in a descending channel for the past two months. However, a recent false breakout indicates a potential recovery in momentum and hints at upward movement.