Bitcoin (BTC) hit a three-week high on Wednesday as US inflation data beat expectations for a second day.
Key points:
- Bitcoin sees bullish price action copied as US inflation data cools for a second straight day.
- Risk assets benefit from a more positive outlook as the chances of a Fed rate cut diminish.
- Traders remain cautious about Bitcoin’s ability to continue its rise.
Bitcoin gains after “much better than expected” US PPI
Data from TradingView showed BTC/USD hitting $65,500 for the first time since June 22.
BTC/USD 12-hour chart. Source: Cointelegraph/Trading View
The producer price index (PPI) for June was 5.5% year-over-year after a monthly decline of 0.3%, according to data from the Bureau of Labor Statistics (BLS).
“The decline in the final demand index in June can be attributed to the prices of final demand goods, which fell by 1.4 percent. In contrast, the final demand index for services increased by 0.2 percent,” a statement said. official press release declared.
% change in PPI over one month. Source: BLS
In response, economist Mohamed El-Erian was optimistic about the outlook for risk assets and Federal Reserve policy.
“These much better-than-expected numbers should boost stocks and further dampen market expectations for future interest rate hikes,” he wrote in a statement. post on.
The PPI joined Tuesday’s publication of the Consumer Price Index (CPI), which surprised by the negative side despite macroeconomic pressure from the US-Iran war and its impact on oil prices.
“Inflation expectations continue to fall,” added trading resource The Kobeissi Letter, referring to bets on a Fed interest rate hike from users of the Polymarket prediction service.
The latest data from the CME Group FedWatch tool also showed a shift in expectations for the Fed’s September decision, with a 0.25% hike no longer the most likely option.
Comparison of the Fed’s target rate probability for the September FOMC meeting (screenshot). Source: CME Group
BTC Price Momentum Fights Bear Market Story
In assessing the current price development of BTC, market participants avoided overly bullish takes.
Related: Bitcoin Gets New $80,000 Target for August: Watch These BTC Price Levels Next
“Liquidity sitting above the $65.6k mark and more importantly the $67.2k mark,” trader Daan Crypto Trades wrote on X, referring to the liquidity of the exchange order book.
“Breaking above this final threshold would turn this into a larger move and we could start targeting the $70,000-plus region again and truly position Bitcoin in the middle of its $60,000 to $80,000 range.”
Four-hour chart of the BTC/USDT perpetual contract. Source: Daan Crypto Trades/X
Trader and analyst Rekt Capital noted that BTC was approaching its 50-month exponential moving average (EMA) – a level from which price should be rejected if bear market history had to rehearse.
“If we follow the same statistical pattern seen over the past 12 months, BTC would likely de-risk for the rest of the month and move back,” added trader Killa on the matter.
BTC chart. Source: Killa/X
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