Bitcoin hit the $30,000 mark on April 12 as upcoming U.S. macroeconomic data heightened tensions.
BTC/USD 1-hour chart. Source: TradingView
market analysts warn
BTC/USD is hovering around a key psychological level after hitting a low of $29,875, according to TradingView.
Preliminary expectations for US March CPI data are for inflation to fall to 5.2%.
Meanwhile, core CPI, which excludes volatile commodities such as food and energy, is expected to be in the range of 5.5% to 5.6%. Core CPI actually met expectations at 5.6%.
CPI was 6% in February, down from January, but a further 1% drop had an immediate impact on bitcoin prices. The cryptocurrency surged to nearly $500 in a matter of minutes and is currently trading calmly above $30,000.
As a risky asset, the short-term price performance of BTC is closely related to CPI data.
That’s because inflation data determines the Fed’s monetary policy and whether it will continue to raise key interest rates.
The year-over-year decline in inflation suggests the Fed’s actions are working and the central bank may soon start reversing its strategy.
Rate hikes are expected to continue through May, but may pause thereafter, according to the CME Group’s FedWatch Tool.
Fed target rate probability chart.Source: CME Group
“We note that the Fed remains largely data-dependent and warned against stopping rate hikes anytime soon,” trading firm QCP Capital wrote in a market update issued that day.
“Markets are pricing in 75% for a 25 basis point hike in May. So the number is very important on two fronts. A weaker-than-expected data could boost prices and lead to a rally in risk assets.”
The QCP went on to say that the release of the FOMC minutes could have a similar impact on cryptocurrencies due to the discrepancy between the Fed’s stance and market sentiment.
Meanwhile, altcoins had a tough 24 hours ahead of the launch of the Ethereum Shanghai upgrade, with most of the top 10 cryptocurrencies by market capitalization down 3-4%.
Ether has fallen to ten-month lows against bitcoin, with ETH/BTC at 0.062.
“As expected, ETH/BTC strength was short-lived,” noted trader Credible Crypto.
ETH/Bitcoin chart.Source: Credible Crypto / Twitter
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board take
As reported by Cointelegraph
