Bitcoin price edged higher despite the mxed US CPI data. On the one hand, investors appear convinced that the worst of the crypto winter is over. Even so, they are yet to fully price in interest rate hikes above 25 basis points.
What’s driving the market?
Data released by the US Labor Department on Tuesday showed that consumer prices in the country rose significantly in January. CPI surged by 0.5% on a month-on-month basis; the highest in three months. Notably, high shelter and energy costs were largely behind the recorded increase.
In reaction to the inflation data, the benchmark of Treasury yields – the 10-year yields – rose to a level last recorded on 3rd January. The surge boosted the dollar index although it remains below the crucial level of $104.00 as has been the case since early January. US stocks and cryptocurrencies, which has been moving concurrently in recent months, also recorded gains as investors appear to fully price in a hawkish Fed.
Before investors fully price in additional interest rate hikes above a 22 basis points increase, bitcoin price will likely continue to trade below $23,000. Even so, amid optimism that the worst of the crypto winter is over, the asset may remain above $20,000 in coming weeks.
Bitcoin price outlook
BTC/USD continued to hover around the crucial zone of 22,000 as the market digested the mixed US CPI numbers. Notably, the trend has persisted since late last week amid uncertainties over the course that the Fed’s monetary policy will take in coming months.
As at the time of writing, bitcoin price was up by 1.15% at 22,043.63. While it remained above the 50-day EMA while hovering around the 25-day EMA. Besides, its RSI is at a neutral level of 50.
In the short term, I expect the crypto to remain range-bound between the support level at 21,000 and the resistance zone of 22, 515.34. For as long as the asset remains above the psychologically crucial level of 20,000, this cautiously bullish thesis will be valid. Even so, I expect bitcoin price to continue trading below 23,000 for a while longer.