It’s all about macroeconomic data this Valentine’s Day as Bitcoin faces tests from familiar sources.
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A steady decline below $22,000 is likely by February 14th as the market moderates the impact of macroeconomic data.
Bitcoin vs. CPI: “Expect Volatility”
According to data from Cointelegraph Markets Pro and TradingView, BTC/USD failed to expand above $21,800 prior to the US Consumer Price Index (CPI) printing in January.
This data, referred to as the “most significant” CPI release, is released at 8:30 AM EST. It is a classic volatility catalyst for risky assets.
Crypto market participants are expecting a busy trading day with $19,000 and $25,000 on the table as potential targets. It depends on how far the result is from the estimate.
“Bitcoin could be worth $24-$25,000 if the CPI shows more positive expansion tomorrow morning.” Venture founder of CryptoQuant, an on-chain analytics platform. Written as part of a Twitter update.
“A negative surprise, on the other hand, will create a whole new test of $19-20k BTC, a very important day. Volatility Expectations”
Year-over-year CPI is expected to be 6.2% compared to 6.4% in the previous month. The month-on-month figure increased from 0.1% to 0.5%.
“Combining this with previous trends raises the bar quite a bit,” says co-founder Michaël van de Poppe. The founder and CEO of Cointelegraph trading firm Eight argued today.
Van de Poppe said $20,500, the “last stage” of Bitcoin’s current retracement, is the key level for the bull market.
“Important” CPI when considering crypto loss
In a recent market update, trading firm QCP Capital flagged factors other than data as cause for concern for crypto investors.
Related: Bitcoin Auction Liquid as BTC Price Closes to 3-Week Low
Recent legal action against blockchain company Paxos, the issuer of Binance.
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Stablecoins may be just the tip of the iceberg in US regulatory policy.
“While regulation continues to work against the industry (maybe until the 2024 election), the cryptocurrency market divergence now appears calmer in that light,” he wrote.
“Therefore, the current CPI type is very important in determining the extent of cryptographic shortcomings.”
The QCP said there was a discrepancy between expectations of a Fed rate cut and reality. Even if the inflation rate falls unintentionally.
“In interest rate markets, we are currently pricing a 30 basis point drop following the 5.2% terminal on Dec 23rd, which is a significant jump from the 4.9% terminal and 50bp drop two weeks ago.” the report highlights
“It is clear that risky assets are not adjusted for expectations of rising interest rates. And we expect today’s print to align all markets. Whether you are selling large stocks. (higher than expected) or rate hike (lower than expected)”
The Fed won’t hold a rate change meeting until the third week of March. CPI is reprinted before that.
