The Bitcoin price surged more than 5% back to the $65,000 level on Wednesday following US CPI inflation data that showed moderating price pressures in April. This supports bets that the Fed will ease interest rates a few times before the end of 2024. The rise in the Bitcoin price came alongside a 0.9% jump to new all-time highs for the S&P 500, while US bond yields and the US Dollar Index slumped to one-month lows. Traders are confident in at least one rate cut by September, with a 71% money market implied probability of at least one cut by then. Bitcoin now faces a crucial technical barrier at its 50DMA at $65,166, with the potential for further short-term upside if it can break above this level and its May highs around $65,500.
Fears about a gradual rise in inflation in Q1 2024 have been a major headwind for Bitcoin in recent months, leading markets to price out aggressive Fed rate cuts. This is a significant reason why Bitcoin has been consolidating within a range, mostly between $60,000 and $70,000. The latest inflation report suggests that concerns about inflation easing from here on out could turn the macro environment into a medium-term tailwind for Bitcoin. While historical data shows that May has not been a favorable month for Bitcoin, the current year, being an election year, could lead to different market conditions. Markets tend to rally into elections, breaking the bearish summer trend, which could impact Bitcoin’s price movement.
Post-halving rallies typically start 4-6 months after the halving, which would suggest no major push higher until after August. However, the current election year dynamics could change this pattern, potentially leading to a breakout in Bitcoin’s price before the usual timeline. Long-term Bitcoin price risks remain tilted to the upside, with factors such as rate cuts, the halving, continued government spending, and demand for spot Bitcoin ETFs potentially driving BTC above $100,000 in 2024 or 2025. It is important to note that crypto is a high-risk asset class, and this information is provided for informational purposes only and does not constitute investment advice. Investors should carefully consider their financial situation and risk tolerance before investing in cryptocurrencies.
In recent years, Bitcoin has been locked within a consolidation range, with fears about inflation and the macroeconomic environment impacting its price movement. The latest US CPI inflation data showing moderating price pressures in April has provided some relief for Bitcoin, leading to a surge in its price. Traders are confident in at least one rate cut by September, and Bitcoin faces a crucial technical barrier at its 50DMA, with the potential for further upside if key levels are broken. The current election year dynamics could lead to a breakout in Bitcoin’s price, contrary to historical trends, with long-term price risks pointing towards the upside.
While historical data shows that May has not been a favorable month for Bitcoin, the potential market dynamics in an election year could change this pattern. Markets tend to rally into elections, breaking the bearish summer trend and potentially impacting Bitcoin’s price movement positively. Despite the high-risk nature of cryptocurrencies, factors such as rate cuts, continued government spending, and demand for Bitcoin ETFs could drive the price of BTC above $100,000 in the coming years. Investors should carefully consider their financial situation and risk tolerance before investing in cryptocurrencies.
