Bitcoin (BTC), which is expected to be less supported than in the previous two CPI reports, could see a drop towards $70,000.
The key takeaways
- The nowcast from the Cleveland Federal Reserve projects that headline CPI for April will rise by 3.56% over last year.
- BTC’s rising wedge could cause a drop towards $70,000
Fed forecasts 0.26% increase in headline inflation
Cleveland Fed’s inflation forecast estimates CPI for April was 3.56%, compared to 3.3% in march.
Source: Cleveland Fed. Expectations of inflation in April and May. Source: Cleveland Fed
The CPI for the month is expected to be 0.45% (down from 0.9%), while core CPI will rise by 2.56% over the year, and by 0.21% over a month. This compares with previous estimates of 2.6% and 0.2%. Official April CPI data is due May 12.
This keeps the picture of inflation mixed. Even if monthly inflation slows down and core prices remain stable, the headline CPI should re-accelerate.
This isn’t a good setup for risk assets. Even a stronger annual CPI can reinforce the idea that the Fed is unlikely to reduce rates soon, and this tends to push speculative investments such as Bitcoin.
Probabilities of the target rate for December’s Fed meeting. Source: CME
Bitcoin is still holding up despite some recent CPI spikes.
BTC’s price, for instance, has risen by 15% since the March CPI report Inflation in the headline rate increased to 3.3%, up from 2.4%.
The first is because institutional buyers absorbed more than 500% of the newly mined Bitcoin supplyStrategy is a major part of the buying.
BTC/USD chart daily vs. market capitalization of institutional buyers. Source: Capriole Investments
The support for the current government is weaker. Strategy has paused its BTC purchasesThe STRC preferred shares continue to trade under their $100 par value.
The issuance of new shares is less effective when STRC’s price falls below the par value. This limits Strategy’s ability to raise more capital and buy Bitcoin.
Weekly Bitcoin purchasing estimates from Strategy. Source: STRC.LIVE
This time, Bitcoin may be more vulnerable to CPI reactions due to the weakening of support.
It is a Sunday postAnalyst Killa stated that larger players could start to de-risk around inflation releases, and pointed out a similar pattern in caution for CPI events 2025.
BTC/USD Performance after CPI Releases Source: TradingView/Killa
“Key level to hold is the 78.6K weekly open, if lost, 74–75K is the next downside target,” “He said,” adding,
“I would watch for liquidity sweeps around this pivot to signal the next move.”
BTC wedge hints at deeper decline toward $70,000
Bitcoin prints a classic ascending wedge pattern in its daily charts.
As a bearish reverse setup, a rising wedge occurs when price moves below lower trend line.
BTC/USD Daily Chart TradingView
BTC climbed toward the wedge’s peak, or where its two trends converge at $84,000 on Sunday. If that level is broken, the wedge could fall to its measured target of $70,000.
Related: Bitcoin profit-taking may ‘accelerate’ as price hits 3-month high: Analyst
In the opposite direction, a breakout above the apex level, which is also the same as the 200-day moving exponential average (200-day EMA), the blue line, may nullify the bearish setting altogether.
The next possible upside target is located in this scenario. $90,000–$95,000 range.
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Source: cointelegraph.com
