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Bitcoin price and the crypto market in general reacted positively to the release of the Consumer Price Index (CPI) data in the United States on Tuesday. Although the reaction was brief, it emphasized BTC’s position in the market as a riskier asset class such that at one point, it stepped above $26,430.
The second largest crypto, Ethereum (ETH) also gained momentum and climbed to highs above $1,850. Ether has since retraced to trade at $1,745 on Wednesday while Bitcoin price dodders at $26,000.
Easing Inflation Triggers Investor Optimism as Bitcoin Price Flips Green
The CPI data carries significant importance in the realm of economic indicators. It provides a gauge for the average directional change in prices that consumers are expected to pay for a basket of goods and services over time.
Investor sentiment saw a boost when the CPI report revealed a softening in the annual inflation rate to 4.9% in April, a figure modestly below the projections put forth by economists surveyed by Dow Jones.
A decrease in the CPI, or a “dropping CPI,” indicates that the average price of these goods and services is declining.
A persistent or significant drop in the CPI can signal deflation, a period of falling prices that encourages investors to spend the surplus income on assets considered to have a higher risk-reward ratio like Bitcoin and crypto.
“When it comes to inflation data, bitcoin embraces its identity as a riskier asset,” Callie Cox, an analyst crypto exchange platform eToro said. “Bitcoin has outperformed the S&P 500 on five out of the last six CPI days – and it’s on track to make it six out of seven with today’s gains.”
This latest CPI data came just a day before the much-awaited Federal Reserve monetary meeting. Over 76% of market watchers, according to a report by CoinDesk, expect the Fed to pause interest rate hikes for the first time since March 2022.
Bitcoin Price on The Move – Whales Stay Put
Bitcoin price faced a brief sell-off last week after the US Securities and Exchange Commission (SEC) sued two of the most prominent crypto exchanges, Binance and Coinbase.
As reported, altcoins like Cardano, Solana, and Polygon were most affected, with the SEC labeling them as securities. Despite BTC dropping to test support at $25,400, it has remained relatively stable implying its maturity as an asset class.
Santiment, a notable cryptocurrency analytics company, recently disclosed data suggesting that Bitcoin’s major holders, often referred to as ‘whales’—those who own between 100 and 10,000 BTC—are amplifying their positions.
They’ve been purchasing approximately $26 million worth of Bitcoin, or roughly 1,000 Bitcoins, daily since April 9.
🐳 As #altcoin madness has ensued, there quietly is a #bullish divergence between #Bitcoin‘s accumulating whales and falling price. With whale holdings moving up by ~1K $BTC per day while prices fall, there is reason to believe a strong rebound can occur. https://t.co/Ol0cK5VhPE pic.twitter.com/FeHPqqJx7o
— Santiment (@santimentfeed) June 11, 2023
This pattern started when Bitcoin hovered around the $28,000 price point, hinting that these significant players are capitalizing on the price drop. Such behavior may predict a prospective bullish turn in the near term.
Insights from Glassnode, another leading on-chain analytics platform, affirm Santiment’s bullish outlook for BTC. Its data shows that whales are sitting tight, unbothered by the ongoing crypto crackdown.
The company’s data highlights that the amount of Bitcoin moved to exchanges by long-standing investors is remarkably minimal, at just 0.004%. In other words, this reveals the unflappable inaction of this group of investors, despite the ongoing market fluctuations and regulatory challenges faced by prominent exchanges.
The percentage of #Bitcoin Long-Term Holder Supply sent to Exchanges remains extremely quiet at 0.004%.
This highlights the profound inactivity of the cohort amidst elevated market distress, remaining indifferent to the #Binance and #Coinbase regulatory charges. pic.twitter.com/yWfdQHu4Ca
— glassnode (@glassnode) June 11, 2023
Meanwhile, the daily chart confirms the building uptrend with a buy signal from the Moving Average Convergence Divergence (MACD) indicator.
A break and a daily close above $26,000, the short-term resistance, would call more retail investors into the market. Retail traders are often the weaker hands in the market and endure the most losses during market downturns.
Bitcoin price must sustain the trend above the 50-day EMA (in red) for bulls to have a fighting chance at breaking the descending trendline hurdle for a renewed move to $28,000 and $26,000, respectively.
On the downside, failure to uphold support at $26,000 may invalidate the anticipated bullish move to $30,000 and allow for a retracement with support at $25,400 and $24,000 in mind.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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