In this article, learn about the newly released CPI data and its influence on the crypto market. Find out how Bitcoin, Ethereum, and Solana have responded to the latest CPI data report.
April’s CPI data report from the U.S. Bureau of Labor Statistics dropped like a bomb. Year-over-year inflation cooled off to 3.4%, shaving a sliver off March’s 3.5%, its lowest in three years.
With the S&P 500 and Nasdaq Composite Index touching all-time highs following the report, the beat on CPI expectations has clearly bolstered confidence in risk assets broadly.
(NDXSPX)
Bitcoin soared off the CPI data, notching a 7.52% increase to land at a hefty $66,240.
BTC now shows a potential cup and handle pattern forming while Ethereum and Solana clocked in gains of 3.42% and 13.39%—the altcoin rally is on.
Today, we’re breaking down further the newly released CPI data and its impact on the crypto market.
🇺🇸 CPI for April just came in at +3.4% YoY in line with expectations.
And #Bitcoin made a big candle📈 pic.twitter.com/3K3mCWsLve
— Melissa J. Erick (@dcres4sure) May 15, 2024
Deciphering the CPI Data’s New Crypto Effect
The latest CPI data is a testament to the Federal Reserve’s aggressive monetary adjustments.
Risk-on investors now anticipate the possibility of a halt in interest rate hikes, sparking optimism for investments such as cryptocurrencies.
Despite the good news, many economists expect the Fed won’t be happy until they reach their 2% inflation target, fueled by predictions of diminishing inflationary pressures across various sectors.
“The Fed will remain in wait and see mode,” suggests the trading resource The Kobeissi Letter, highlighting the delicate balance the Federal Reserve seeks to maintain.
US PPI Data provides another glimpse into the inflation picture and FED Policy…. clearly HAWKISH suggesting FED may not cut rates as aggressively or as quickly as many hope. $USD pic.twitter.com/T2rEdoBViV
— IceCap (@IceCapGlobal) May 14, 2024
While CPI data is down, the Producer Price Index rose 0.5% in April; services increased 0.6%, and goods advanced 0.4%.
The Fed, piloted by Jerome Powell, isn’t blinking with Powell calling the latest PPI data “mixed.”
“I wouldn’t call it hot, I’d call it mixed,” Jerome Powell’ said on Tuesday.
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What Are the Next Big Moves Bitcoin Needs to Make?
(BTCUSDt)
Looking at the BTCUSDt chart, the price has strong support around $62,800 and a key support level at $60,500. The first resistance level is at $66,200, leading up to a significant barrier at $68,000
The 20-day SMA and the 200-day SMA are nearly identical, at $66,179 and $66,076, hinting at a balanced market.
“Ideally BTC leads strength from here, would need to flip $65K still for market confidence to return imo,” notes popular trader Skew, encapsulating the cautious yet hopeful sentiment pervading the markets.
Importantly, we see the potential formation of a cup and handle pattern, a bullish indicator.
If BTC breaks above the $66,200 resistance with strong volume, this pattern could be confirmed, signaling a significant upward move.
As investors and policymakers alike parse through the latest economic data, a narrative of cautious optimism takes shape, underscored by the resilience of digital assets like Bitcoin.
Crypto Sees Fresh Inflows Amongst CPI Data
CoinShares reported a notable reversal in crypto investment product flows, with $303 million pouring in, marking an end to a five-week outflow streak.
Bitcoin funds, in particular, have seen significant inflows, highlighting renewed institutional interest amid new inflation concerns.
(Source)
Despite the uptick in inflows, trading volumes for crypto ETFs have halved from April to May, suggesting a decrease in participation within the crypto ecosystem among ETF investors.
With CPI data hitting the Fed’s expectations, risk-on assets like BTC, ETH and the crypto ETFs are in prime territory to outperform.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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