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Bitcoin saw a shaky market day after the release of the CPI data. While forecasts for inflation numbers were high, they would come in lower than the actual number and the crypto market had reacted negatively to the news. Bitcoin had fallen below $19,000 when the market bled, but there was a reversal towards the end of the trading day. The question now remains whether the digital asset could hold these gains.
Can Bitcoin Keep Up?
In the past 24 hours, the price of bitcoin is up more than 6%, bringing it close to the $20,000 resistance level. This level remains hard to beat for the digital asset due to the resistance being built at this crossroads by bears and indicators point to bitcoin cannot rise above this level.
Fuad Fatullaev, co-founder and CEO of Web3 ecosystem WeWay, explained that bitcoin was already known to react in such a way to the CPI data release. And with no inflation slowing expected in the near future, private and institutional investors are wary of entering the market.
Inflation is likely to remain above 8% and this will prompt the Fed to tighten its policy. The result of this is a poor market environment for risky assets such as bitcoin. The broader market is likely to tank, bringing the cryptocurrency market down in the process.
BTC rebounds to $19,600 | Source: BTCUSD on TradingView.com
“Unfortunately, the market is still being billed with significant headwinds as inflation is still likely to remain above 8% and this will not stop the FOMC from maintaining its aggressive stance,” Fatullaev told NewsBTC. The CEO further added that the price recovery does not mean that bitcoin would not see more downside.
“It is not yet free from a further negative downturn. As such, stronger negative selling pressures that can be ushered in will certainly weigh on the asset’s price even more and investors will prefer to sit on the sidelines and pursue a perfect entry point after the volatility introduced by the inflation report has dissipated. declined.”
Bitcoin would need to clear its 50-day moving average to establish a new bull trend, but the $20,000 resistance will likely make that impossible. Nevertheless, the accumulation trend will provide much-needed momentum for the digital asset if it continues.
Featured image from Investor's Business Daily, chart from TradingView.com
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