Bitcoin (BTC) is back $ 36,000 ahead of the New York session on Wednesday, as investors await new inflation data in May, and El Salvador approved a bill that makes cryptocurrency a legal tender in the country.
Bull market bottom?
The benchmark cryptocurrency rose 9.86% to an intraday high of $ 36,696, offsetting some of the losses incurred in the previous session. Then the BTC / USD exchange rate fell to almost $ 31,000 on Tuesday for fear that the pair will enter a bearish phase similar to 2018 after surpassing $ 65,000 in mid-April.
On the other hand, the bulls continued to see bitcoin as the main tool against inflation, with Mike McGlone, chief strategist at Bloomberg Intelligence, noting that the potential for cryptocurrency to reach $ 40K in the coming sessions is higher than $ 20K. He said:
give up? $ 40,000 is probably over $ 20,000 – Bitcoin’s fall of June 8 and revision of support for the lower end band around $ 30,000 provided plenty of funds for the intense bearish feeling typical of more persistent beef market bottoms. ”
Bitcoin trades at discounted prices, according to Mike McGlon of Bloomberg Intelligence.
The big pump in Central America
Bitcoin received further bullish consolidation from El Salvador. The country of Central America, led by President Nyub Böckel, was the first country to adopt Bitcoin as a legal tender.
The law will come into force within 90 days, so that Salvadorans can use bitcoins to pay for and receive goods and services. They will also be able to pay taxes in cryptocurrency.
Bukele also announced that El Salvador will use the country’s “volcanic energy” to extract Bitcoin. The announcement was in response to an announcement that Tesla CEO Elon Musk had been suspended due to environmental concerns. Musk’s decision led to serious chaos among investors, which caused a massive collapse in the cryptocurrency market.
Important inflation data awaits us
The latest rise in bitcoin is also coming from technical support. At around $ 31,000, traders have expressed a short-term bullish belief due to the ability of cryptocurrencies to hold $ 30,000 in support of recent history.
For example, on May 19, Bitcoin jumped more than 40% overnight after testing $ 30,000 low.
Bitcoin maintains its long-term bullish sentiment above $ 30,000. Source: TradingView
Yuri Mazur, Head of Data Analysis at CEX.IO Broker, indicated that BTC / USD could hold around $ 30,000 in support despite the recent downturn. The chief analyst pointed to rising inflation behind his bullish analogy. He told the Cointelegraph:
Given the current depreciation of bitcoin, the fact that analysts expect the US CPI to rise to 4.7% could be a major contributor to the rise in BTC / USD […] In the end, bitcoin could be a big winner if inflation continues to rise. Which it certainly is. ”
The data emerged despite concerns that the Federal Reserve would eventually raise interest rates to push inflation to the preferred 2% target. US Treasury Secretary Janet Yellen made it clear in an interview with Bloomberg that higher interest rates would be an added benefit.
A higher interest rate reduces the investor’s appetite for hedging assets such as bitcoin and gold.
However, according to Yuri, the rate hike will not hurt bitcoin demand among investors, noting that extravagant lending will reverse the rise in US stock market indices. he added:
“If the Fed takes an aggressive stance to raise interest rates, it will reduce inflation, but it will create a significant risk of a collapse in the stock market, as corporate borrowing costs will rise rapidly. In this scenario, Bitcoin can also raise more funds in almost a pinch. Save value in times of high financial risk as more investors seek a safe haven to invest their money. ”
US KPI data will be published on Thursday.