Bitcoin Price Prediction as US Core Inflation Data is Released – Is the Bull Market About to Start?
Bitcoin’s price surged by 7.50% to $66,350 amid the latest U.S. inflation data release. The U.S. consumer price index (CPI) rose by 0.3% in April, down from 0.4% in March and February.
This lower-than-expected increase suggests inflation is resuming its downward trend, bolstering financial market expectations for a potential interest rate cut by the Federal Reserve in September.
CPI Data and Its Economic Implications
The CPI data is significant as it indicates cooling inflation, which is a positive signal for the economy. The slower increase in consumer prices aligns with other data showing retail sales were flat in April, further suggesting a slowdown in domestic demand.
This cooling demand is welcome news for Federal Reserve officials aiming to achieve a “soft landing” for the economy without triggering a recession.
Key Inflation Drivers: Shelter and Gasoline Costs
Shelter costs, including rents, increased by 0.4% for the third consecutive month, and gasoline prices jumped by 2.8%. These two categories accounted for over 70% of the CPI increase. In contrast, food prices remained unchanged, with notable decreases in supermarket prices for items like eggs, which dropped by 7.3%.
🇺🇸Happy US CPI Day!
Here's What You Need to Know:
*April CPI M/M Est: 0.4%; Prev. 0.4%
*April CPI Y/Y Est: 3.4%; Prev. 3.5%*April Core CPI M/M Est: 0.3%; Prev. 0.4%
*April Core CPI Y/Y Est: 3.6%; Prev. 3.8%-Time: 8:30AM ET
*Source: @Investingcom
*Link:… pic.twitter.com/JJN0D1Lizb— Jesse Cohen (@JesseCohenInv) May 15, 2024
Year-over-year, the CPI increased by 3.4% in April, down slightly from 3.5% in March. This annual increase has slowed significantly from a peak of 9.1% in June 2022. Economists had forecast the CPI to rise by 0.4% on the month and 3.4% year-over-year, indicating that inflation is moderating.
Dovish FOMC Stance Weakens DXY; Driving Bitcoin Price Up
Federal Reserve Chair Jerome Powell stated that although inflation is going down slowly, he expects it to continue moving downward towards the Fed’s 2% target. Financial markets now see a roughly 73% probability of a rate cut in September, up from 69% before the data release. Some economists even anticipate that the Fed may start lowering borrowing costs as early as July.
The Fed has kept its benchmark interest rate in the 5.25%–5.50% range since July, following a series of rate hikes totaling 525 basis points since March 2022.
The expectation of a rate cut has positively impacted stock markets, with Wall Street trading higher, the dollar weakening against other currencies, and U.S. Treasury prices rising. This economic environment has fueled Bitcoin’s price rally as investors seek alternative assets amidst changing monetary policies.
Bitcoin Price Prediction
Bitcoin is currently trading at $66,350, up 7.50%, according to a bullish Bitcoin price prediction. The 4-hour chart shows a strong bullish rally, with Bitcoin breaking out of a symmetrical triangle pattern around the $63,300 level.
This breakout is confirmed by two significant bullish engulfing candles, indicating robust upward momentum.
However, caution is warranted as recent candlestick formations, including Doji and spinning tops around the $66,200 level, suggest potential market indecision. These patterns, coupled with an overbought RSI of 78, could signal a forthcoming bearish correction.
Bitcoin Price: Key Trading Levels
Key price levels to watch include the pivot point at $65,150, which serves as a crucial support level. Immediate resistance is found at $67,300, with further resistance at $68,545 and $70,000.
On the downside, immediate support is at $63,300, followed by $61,560 and $60,185. The 50-day Exponential Moving Average (EMA) at $62,565 also provides critical support, reinforcing the bullish trend.
If Bitcoin fails to sustain its upward trajectory, a pullback to the pivot point at $65,150 is likely, with further declines potentially reaching $63,300. The RSI being overbought suggests that a bearish correction may be imminent.
Conclusion: The overall outlook for Bitcoin remains bullish above the $65,150 pivot point. However, a break below this level could trigger a sharp selling trend, targeting immediate support at $63,300.
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