Bitcoin (BTC) hit a three-week high on Wednesday after U.S. inflation data came in better than expected for the second day in a row.
Important points:
Bitcoin is seeing mimetic bullish price action as US inflation data cools for the second day in a row. The outlook for risk assets is becoming more positive as the probability of a Fed rate cut decreases. Traders remain conservative about Bitcoin’s ability to continue rising.
Bitcoin rises as US PPI ‘much higher than expected’
According to TradingView data, BTC/USD reached $65,500 for the first time since June 22.
BTC/USD 12-hour chart. Source: Cointelegraph/TradingView
According to data from the Bureau of Labor Statistics (BLS), the producer price index (PPI) in June was 5.5% compared to the same month last year, after falling 0.3% from the previous month.
“The decline in the final demand index in June can be attributed to a 1.4% decline in the prices of final demand goods. In contrast, the index of final demand services rose 0.2%,” he said. Official news release said.
Monthly percentage change in PPI. Source: BLS
Economist Mohamed El-Erian, on the other hand, expressed optimism about the outlook for risk assets and Federal Reserve policy.
“These much higher-than-expected numbers should push up stock prices and further temper market expectations for future rate hikes,” he said. Post to X.
The PPI joined Tuesday’s Consumer Price Index (CPI) release. I was surprised by the negative aspects. Despite the macro pressures and impact on oil prices from the US-Iran war.
“Inflation expectations continue to decline,” trade publication Kobisi Letter added, citing bets by users of prediction service Polymarket that the Fed would hike rates.
CME Group’s latest data fedwatch tool It also showed that expectations for the Fed’s September decision have changed, with a 0.25% rate hike no longer the most likely option.
Comparison of the Fed’s target interest rate probabilities at the September FOMC meeting (screenshot). Source: CME Group
BTC price momentum fights bear market history
Assessing the current BTC price trend, market participants avoided taking an overly bullish view.
Related: Bitcoin Sets New $80,000 Target in August: Watch These BTC Price Levels Next
“Liquidity is above the $65,000 level and most importantly at the $67,000 level,” said trader Daan Crypto Trades. I wrote X refers to the liquidity of the exchange’s order book.
“If we can break out of the latter, this would be a bigger move and we could start targeting the above $70,000 region again, positioning Bitcoin truly in the middle of the $60,000 to $80,000 range.”
4-hour chart of BTC/USDT perpetual contract. Source: Daan Crypto Trades/X
Trader and analyst Recto Capital noted that Bitcoin is approaching its 50-month exponential moving average (EMA). Prices from this level should be rejected. Bear market history I had to repeat it.
Trader Kira added: “If we follow the same statistical pattern seen over the past 12 months, BTC is likely to be de-risked and pushed back for the remainder of the month.”
BTC chart. Source: Kira/X
