The latest U.S. inflation data release has caused Bitcoin’s price to surge by 7.50% to $66,350. The U.S. consumer price index (CPI) rose by 0.3% in April, signaling cooling inflation and suggesting a potential interest rate cut by the Federal Reserve in September. This decrease in inflation is positive for the economy, aligning with other data showing a slowdown in domestic demand. Federal Reserve officials aim for a “soft landing” for the economy without triggering a recession, making this data significant.
Shelter costs, including rents, increased by 0.4% for the third consecutive month, while gasoline prices jumped by 2.8%, driving the majority of the CPI increase. Food prices remained unchanged, with decreases in supermarket prices for items like eggs. Year-over-year, the CPI increased by 3.4% in April, slightly down from 3.5% in March. Economists had forecast the CPI to rise by 0.4% on the month and 3.4% year-over-year, indicating a moderation in inflation.
Federal Reserve Chair Jerome Powell expects inflation to continue moving downward towards the Fed’s 2% target. Financial markets now see a 73% probability of a rate cut in September, up from 69% before the data release. Some economists anticipate the Fed may lower borrowing costs as early as July. The expectation of a rate cut has positively impacted stock markets, weakened the dollar against other currencies, and driven U.S. Treasury prices higher, leading to Bitcoin’s price rally as investors seek alternative assets.
Bitcoin is currently trading at $66,350, up 7.50%, with a strong bullish rally. The breakout from a symmetrical triangle pattern around $63,300 is confirmed by significant bullish engulfing candles, indicating robust upward momentum. However, caution is advised as recent candlestick formations and an overbought RSI of 78 could signal a forthcoming bearish correction. Key price levels to watch include the pivot point at $65,150 as crucial support and resistance levels at $67,300, $68,545, and $70,000.
The overall outlook for Bitcoin remains bullish above the $65,150 pivot point, but a break below this level could trigger a sharp selling trend. Immediate support levels are at $63,300, $61,560, and $60,185, with the 50-day Exponential Moving Average (EMA) at $62,565 providing critical support. While the RSI being overbought suggests a bearish correction may be imminent, sustaining the upward trajectory could lead to further price increases. Investors should monitor these key levels for potential market movements.
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