Bitcoin (BTC) Rebounds to $62,000, Market Awaits US CPI Data and Fed’s Powell
Bitcoin (BTC) halted its bearish trend and regained upward momentum, surpassing the $62,577.98 mark and reaching an intra-day high of $63,657.98.
Arslan Butt•Tuesday, May 14, 2024•3 min read
Bitcoin (BTC) halted its bearish trend and regained upward momentum, surpassing the $62,000 mark and reaching an intra-day high of $63,657.98.
This rebound also propelled Ethereum (ETH) above the $2,900 level, while other top altcoins like Solana (SOL), XRP, and Cardano (ADA) also experienced significant gains.
Moving ahead, the market is closely monitoring United States macroeconomic data, particularly the upcoming CPI release on May 15. Federal Reserve Chair Jerome Powell’s remarks on the economy are eagerly anticipated for any hints about future policy decisions, which could have implications for Bitcoin and crypto markets.
US Fed’s Cautious Interest Rate Stance and Bitcoin’s Inflation Hedge
On the US front, Fed Vice Chair Philip Jefferson is suggesting that the Federal Reserve should keep interest rates unchanged until there are more evident signs that inflation is decreasing, with a particular emphasis on bringing inflation back to the target rate of 2%.
However, the latest poll mentioned indicates that a majority of economists surveyed anticipate a reduction of 25 basis points in the Federal Reserve’s benchmark interest rate in September, with an even larger number of economists expecting an additional 50 basis points cut in 2024.
This suggests that many economists believe the Federal Reserve may need to lower interest rates in the near future to stimulate economic activity or counteract any potential negative effects of high inflation.
On the data front, the US Producer Price Index (PPI) for April is forecasted to increase by 2.2% year-on-year (YoY), while the Core PPI is expected to rise by 2.4% YoY. Consumer Price Index (CPI) inflation is projected to moderate to 3.4% YoY in April from the previous 3.5%, with Core CPI declining to 3.6% YoY from 3.8% in March.
Therefore, the anticipation of interest rate cuts and moderate inflation projections could positively impact Bitcoin’s price by boosting investor confidence and reducing concerns about potential economic risks, driving demand for alternative assets like BTC.
El Salvador’s Bitcoin Holdings and Investment Strategy
It is worth noting that El Salvador has launched a proof-of-reserves website to track its Bitcoin holdings in real-time, currently valued at $360 million. In the past week, the country bought seven BTC, totaling $438,000, aligning with its goal of adding one Bitcoin to its treasury daily.
Since adopting Bitcoin as legal tender in September 2021, El Salvador aims to boost financial inclusion and remittance efficiency.
Despite initial criticism and price drops, the nation’s Bitcoin holdings now show an unrealized profit of $57.4 million, with an average buying price of $43,097 per BTC, demonstrating the profitability of its investment as Bitcoin trades above $62,000.
El Salvador’s proactive Bitcoin accumulation and profitable investment strategy positively impact BTC price sentiment, showcasing institutional confidence and attracting further investment in Bitcoin.
Hong Kong Bitcoin and Ether ETF Outflows Amid Market Volatility
On the other side, Hong Kong’s Bitcoin and Ether ETFs experienced their biggest net outflow of $39 million since their launch less than two weeks ago, with ChinaAMC’s Bitcoin fund witnessing a significant outflow of $15.5 million.
Spot Ether ETFs also saw net outflows of $6.6 million, with Harvest Global and ChinaAMC losing $3 million each. Since their debut on April 30, these ETFs have faced total outflows of $20.9 million, surpassing the $18.4 million inflows by May 10.
The ongoing outflows from Hong Kong’s Bitcoin and Ether ETFs, totaling $52.5 million since May 9, coincide with Bitcoin’s drop below $61,000. This reflects investor caution amid market volatility, unlike the robust growth seen in the larger U.S. crypto ETF market valued at $50 billion.
Therefore, the outflows from Hong Kong’s Bitcoin and Ether ETFs contribute to downward pressure on BTC price, as investor caution amidst market volatility contrasts with the growth seen in the larger U.S. crypto ETF market.
Bitcoin Technical Outlook
Bitcoin (BTC/USD) is trading at $62,022, down about 1.50%, with a neutral outlook. The 4-hour chart shows a key level at $61,764.
If Bitcoin rises, it could face resistance at $63,824, $65,506, and $67,222. If it falls, support levels are at $60,185, $58,812, and $56,640.
Technical indicators suggest the market is balanced, with the Relative Strength Index (RSI) at 50. The 50-day Exponential Moving Average (EMA) is $62,023, close to the current price. A symmetrical triangle pattern around $61,760 indicates possible price swings.
If Bitcoin drops below $61,764, it might fall to $60,185, $58,800, or $56,640. If it rises above $63,000, it could reach $65,500 or $67,250. The market is cautiously bullish above $61,765, but a drop below this could lead to significant losses.
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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