Should Traders Take Bitcoin’s Turnaround Today as a Bullish Indicator?

Leading cryptocurrency token Bitcoin (BTC) climbed 1.06% on Wednesday morning after falling on Tuesday ahead of the US CPI report.

The coin has now achieved a price point of $62,463 (BTC/USD), but it looks unlikely that it will go as high as $65,000 anytime soon. Bitcoin is fighting a losing battle against inflation indicators, and every time there is new inflation data that shows the rate is still high, Bitcoin tends to fall.

Traders still have the US CPI reports to look forward to this week, which are scheduled to be released today. The Consumer Price Index is a very strong inflation indicator and one that the Federal Reserve will be watching closely. The Fed is looking for signs that inflation is dropping toward 2% so that they can cut interest rates, but they have not had that window of opportunity yet this year.

Earlier in the week, the US PPI data was released and showed an increase for this set of economic factors that was higher than anticipated. The Producer Price Index revealed that inflation was higher in April than in March, and that is going to hurt Bitcoin’s chances of going high and staying high.

What to Expect from CPI Effect on Bitcoin

The Consumer Price Index will likely show that inflation is still high and getting higher, and that will have a knockdown effect on Bitcoin and the rest of the cryptocurrency market. If the expected numbers for CPI are accurate, then inflation will increase by 3.4%. That is not as big of an increase as we saw the previous month, but it still shows inflation moving in the wrong direction.

Some Fed members say that they do not expect to issue rate cuts this year, and that too will have an effect on Bitcoin. Any indicator that points toward high inflation will make Bitcoin and other cryptos seem like risky ventures, and those factors will keep investors away from putting their money into crypto.

ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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