Today’s surge in Bitcoin’s price to $30,720, exhibiting a modest rise of 1.02%, coincides with the anticipation of U.S. consumer price index (CPI) data. Aiding this bullish trend is the drop in the BTC supply on exchanges, which now stands at a five-year low. A compelling question in the crypto community is the steadiness of Bitcoin above its psychological support of $30,000, as eyes are set on key U.S. inflation data.
Economists predict a moderate continuation of both headline and core inflation, given the hawkish policy of the Federal Reserve. The central bank’s pause in interest rate hikes, with a potential for recommencement if inflation data underwhelms, furthers this expectation. The prospect of a cooling CPI could persuade the Fed to prolong the pause.
In contrast, the U.S. dollar index languishes at its worst levels since May, after marking a four-day drop by 2.15%. This weakening of the greenback against top foreign currencies indicates a waning desire for safe-haven assets among global investors. Bitcoin, considered a risk-on asset, seems to have found favor in these circumstances, courtesy of its traditionally negative correlation with the dollar.
Concurrently, the receding supply of Bitcoin on exchanges, now at its lowest level in five years, also projects a bullish scenario. Often, traders withdraw their BTC from exchanges for long-term holding purposes. Moreover, on-chain data reveals persistent BTC accumulation throughout 2023, with an average increase of nearly 27,000 BTC per month. This points towards prospective upward mobility for Bitcoin in the coming months.
From a technical standpoint, the BTC/USD pair seeks the $31,000-$31,500 range in July, a band concurrent with Bitcoin’s critical resistance level within its sideways consolidation channel. Meanwhile, a reversal could push the BTC price to test the channel’s lower trendline near $29,900. Given the possible influence of Fed’s upcoming rate decision on July 25-26, traders should remain vigilant for any significant divergences.
While the ascension of Bitcoin price is visible, it’s crucial to remember that each investment and trading move encompasses risk. Consequently, individual research is vital when reaching a decision. The potential of Bitcoin’s future upward trajectory sounds promising, but as is the nature of the beast, it’s always subject to fluctuation. Conclusively, Bitcoin’s present stature is an intriguing blend of favorable conditions and cautious optimism.
Source: Cointelegraph
