There appeared to be relief in the air after the latest US inflation data showed a decrease in the persistent annual inflation. $79,387.86, up 2.89% in the last 24 hours, was the price for one Bitcoin, while the overall total cryptocurrency market saw an increase of 2.36% which put its value at around $2.69 trillion. Other cryptocurrencies, such as Ethereum and XRP, also increased in value as traders weighed how inflation would potentially impact Federal Reserve policy.
Bitcoin Price Surges Past $79K with Core CPI at 66-Month Low
With a gain of around 4.5% in the hour that followed the release of the inflation data, Bitcoin prices crossed the $79,000 level. Ethereum also increased by around 8%, reaching $2,640 with a positive impact on the market overall.
There was a great degree of interest in the annual Core Consumer Price Index (CPI) which fell to 2.4% and was its lowest since for more than 66 months. Core CPI excludes volatile food and energy prices.
The slower core inflation damage expectations that the Federal Reserve might not be as aggressive as it was previously. It may also provide less restrictive inflation policies. This would be positive for Bitcoin and other risk assets, because of low inflation and low borrowing costs.
The headline CPI remained high at 3.4% but the market seems to understand that part of the increase was due to high prices in energy. This impact may also be due to a supply side disruption rather than an inflation cost.
Higher Expected Monthly Core CPI Widens Fed Rate Projections
While the annualized core inflation rate was lower, the month-on-month core inflation increased by 0.3% rather than the expected 0.2%.
As the recent increase in services inflation, and inflation of services that tend to reflect domestic demand, also increased, the Federal Reserve was presented with more difficult decisions regarding the next policy steps. This would explain why some policy rate traders were less optimistic regarding policy rates, despite stock market and Bitcoin gains.
Since inflation expectations tend to be even more variable in the shorter term, the outlook for higher inflation is more important for the Bitcoin price outlook. Expectations of downward trending inflation would also be positive for Bitcoin. monthly inflation could be a drag on policy expectations.
Bitcoin Price Prediction: Can BTC Go Beyond $80,000?
Currently, BTC is trading just below the $80,000 resistance zone. A break above the resistance zone with higher trading volumes could encourage the bulls to drive the price higher to the $82,000 to $84,000 price levels.
Improving momentum in the technical analysis can also be seen on the positive move of the MACD histogram (at 13.86), even if the MACD and the signal lines are still in the negative territory.
Bitcoin, at the time of writing, is in the neutral territory on the RSI at 54.98, suggesting an improving momentum without overbought conditions.
If Bitcoin is unable to break above $80,000, it could see a pullback to the support zone at $78,000. This could even drag the price lower to the $76,000 support.
Overall, the most recent CPI report has improved the shorter-term outlook of Bitcoin. However, we must wait to see the direction of the Federal Reserve’s policies and if the inflation data confirm the trend of broader disinflation for the next significant catalyst.
