Bitcoin’s recent surge to $29,400 is occurring concurrently with the release of the Consumer Price Index (CPI) report on April 12th, which is prompting traders to speculate on whether the Federal Reserve will pivot.
The BTC price reached a ten-month high of $29,650 on April 10th, as market participants eagerly await the upcoming CPI report to gain further insight into the Federal Reserve’s battle against inflation. If the report indicates a decrease in inflation, this could provide the impetus for BTC’s upward trajectory. It is worth noting that on April 10th, Bitcoin’s intraday gains were accompanied by a decline in U.S. equities, underscoring the coin’s diminishing risk-on qualities.
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The release of the March Consumer Price Index (CPI) data on April 12 could affect the Federal Reserve’s decision-making, with a predicted drop in inflation to 5.1% from the previous year-over-year rate of 6.0%. A decrease in CPI increases the chances of a shift towards a more dovish direction, while continued inflationary forces could result in more interest rate hikes in May.
The rise in Bitcoin above $29,000 suggests that crypto traders are anticipating a decrease in inflation, potentially leading to a Fed pivot. However, the U.S. Dollar Index climbed 0.7% on April 10, indicating macro investors foresee a rate hike ahead. The market predicts a 70% likelihood of the Fed raising rates by 25 basis points at its May meeting due to a tightening labor market, which gives the Fed more power to continue increasing lending rates.
Bitcoin is expected to reach $30,000 before the Fed FOMC, but its ability to maintain these gains depends on the inflation data. From a technical analysis perspective, Bitcoin needs to surpass its weekly resistance range of $29,500 to $32,000 to make progress toward $40,000. This range has been a support level in multiple past sessions. If Bitcoin experiences a pullback from this range, it may decline sharply toward its 50-week and 200-week exponential moving averages, which are around $25,250 and $25,000 respectively.