With an eventful week drawing to a close, all attention is focused on Bitcoin (BTC), the leading cryptocurrency. As the US CPI data looms on 12 July, investors eagerly anticipate its impact on BTC—will it drive the price higher or trigger a significant drop below $30K?
CPI Data and Bitcoin: Inflation’s Impact on BTC Price
The CPI data, which measures inflation, has a notable effect on Bitcoin’s price movements. Last month, US inflation dropped to a two-year low of 4%, down from 4.9% in April. While this is a significant decrease compared to the peak of 9.1% a year ago, core prices have remained somewhat steady, slipping slightly to 5.3% from 5.5%.
The Federal Reserve’s firm stance on monetary policy has caused a reversal in yield declines prompted by these numbers. As another interest rate increase is expected later this month, the CPI figures for this week are unlikely to impact the Federal Reserve’s decisions in the immediate two weeks.
The upcoming June CPI data might offer clues about the possibility of a rate hike in September. It is projected that the CPI will further slow to 3.1%, with core prices expected to decrease to 5%.
While an increase in the Consumer Price Index (CPI) can bring volatility to the crypto market, it doesn’t necessarily mean losses for traders. Day traders can leverage CPI data to their advantage by taking advantage of market dips or highs triggered by CPI news. They can buy or sell Bitcoin accordingly, aiming to make a profit when the market stabilizes.
Bitcoin Price Outlook: Anticipated Developments
Bitcoin’s recent price action saw it rise above $31,000, only to face selling pressure that pushed it down to the 100-day EMA at $30,000. Currently, BTC is trading at $30,262, showing a slight decline from yesterday.
However, the bounce off the 100-day EMA suggests a bullish sentiment, as traders see minor dips as opportunities to buy. This increases the chances of a breakout above the resistance zone of $31,200 to $31,500, potentially propelling Bitcoin toward $40,000. Although bears may try to halt the upward movement around $32,500, the buying power is expected to prevail.
If the Bitcoin price experiences a decline and falls below the $29,600 mark, it would indicate a shift in control to the bears. In such a scenario, there is a possibility of a further drop towards the support zone around $26,500.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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