Bitcoin Price Gains 3.5% as US Consumer Price Index Data Confirms Lower Inflation

Bitcoin Price Gains 3.5% as US Consumer Price Index Data Confirms Lower Inflation

Bitcoin (BTC) rose sharply later on August 26 as new economic data from the United States fueled expectations of a change of course from the Federal Reserve.

1-hour candlestick chart of the BTC/USD pair (Bitstamp). Source: Trade View

Bitcoin rebounds but maintains its intraday trend

Data from Cointelegraph Markets Pro and TradingView showed a 3.55% rise for the BTC/USD pair during the day, helping to match the highs seen earlier in the week.

The move was a surprise turnaround for bitcoin, which had come under selling pressure hours earlier as markets awaited guidance from Fed Chairman Jerome Powell at the Jackson Hole symposium.

With that speech yet to be delivered at the time of writing, a bearish catalyst has emerged in the form of the latest reading of the Personal Consumption Expenditure (PCE) Price Index, which was below expectations.

Analysts responded positively, as the figures reinforced the idea that US inflation had already peaked, an idea already supported by the consumer price index (CPI).

Here’s how the #crypto market reacted to the PCE report better than expected. #BTC liquidity is on the move. A range break before the #JPow keynote at 10am ET can’t be ruled out. After all, it’s the #FED #FuckeryFriday #NFA — Content Indicators (@MI_Algos) August 26, 2022.

However, Caleb Franzen, senior market analyst at Cubic Analytics, noted that the hourly structure on BTC/USD remained in place despite the rise. Bitcoin has been trading in an unsuspected range since the August 19 drop from higher levels.

#Bitcoin 1 hour structure still intact after PCE data. We are facing resistance in the red zone and we are also retesting the former support trend (teal), which threatens to act as resistance as well. — Caleb Franzen (@CalebFranzen) August 26, 2022.

Analyst Kevin Svenson was equally cautious in his view of the potential ripple effects for bitcoin.

“The PCE data is bullish. The FED uses this data, so now speculators are high stakes, “he said. Explain.

“But if Powell stays the course, we could easily go down again, so we have to be careful. It’s kind of a toss up now. »

At the time of writing, BTC/USD was trading around $21,500, a key area of ​​bitcoin price realization.

“Most of the participants” in Bitcoin are asleep

Analyzing longer-term trends, BlockTrends analyst Caue Oliveira gave bad news to those hoping for a return to a more seismic shape for the price of BTC.

Also read: Post-discount CME bitcoin futures amid ‘very sensible sentiment’

Network usage, he noted in a blog post the same day, was still trending lower, leaving little room for any bull run that would be supported by strong volume.

“The new bitcoin bull market is off, at least for now,” he admitted.

“With no signs of increased demand on the network, a bitcoin price recovery is still a long way off, suggesting a build-up. »

Chart of average bitcoin transaction volume (adjusted for change) (7-day moving average). Source: Glassnode/Twitter

An accompanying chart from on-chain analysis firm Glassnode showed that average on-chain transaction volume was at a two-year low, even taking into account the recent price rally.

Oliveira added that this explained that the exchanges’ BTC reserves were at their lowest level in four years, as the appetite for exchanges decreased due to the lack of speculative activity.

“So far, most participants remain inactive, including institutional ones,” he said.

“A good period for long-term hoarders, but for short-term traders, one must be careful. »

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of All investment and business transactions involve risk. You should do your own research before making a decision.

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