The market awaits inflation data to "surprise," BTC rises slightly

Author: Mary Liu, BitpushNews

After struggling to break through the resistance level of $61,500 for two consecutive days, the price of Bitcoin has rebounded. According to Bitpush data, shortly after the U.S. stock market opened on Monday, the intraday price of BTC reached as high as $63,269, and as of the time of writing, it stands at $62,907, up 2% in the past 24 hours.

Market Awaits Inflation Data

Market participants are awaiting U.S. inflation data to help determine whether the Federal Reserve will cut interest rates in 2024. The U.S. Producer Price Index (PPI) is expected to be released on May 14, followed by the Consumer Price Index (CPI) on May 15.

According to CME's FedWatch tool, market analysts predict a 72% chance that interest rates will remain unchanged at the July Federal Open Market Committee (FOMC) meeting, while the likelihood of a rate cut later this year has increased, with a 48.6% chance of a cut at the September meeting. Traders predict a 91.1% chance that rates will remain unchanged at the June meeting.

A Reuters poll conducted from May 7 to 13 showed that nearly two-thirds of the economists surveyed (70 out of 108) expect the federal benchmark rate to be cut for the first time in September, by a range of 5.00%-5.25%. Last month, just over half of those surveyed expected a rate cut in September. Only 11 predicted a cut in July, and no one indicated a cut in June, while 26 predicted a cut in April, with 4 expecting a cut in June.

Analyst Tedtalksmacro commented on this week's market dynamics, stating, "Inflation data is the focus, and volatility is expected. However, this is the first time in a while that we might see inflation data slowing down."

The analyst explained that lowering inflation would "benefit risk assets like Bitcoin," putting the market on the "edge of rising."

Analyst Seth shared the following chart in a post on X, stating that the Relative Strength Index (RSI) has broken through the downward trend line in the daily timeframe.

The analyst acknowledged that this week's "CPI, core CPI, PPI, and Fed Chair speeches" could influence the direction of BTC prices, saying, "Jerome Powell might help us regain confidence. The U.S. economy is not as strong as the data suggests. The Ludwig Institute reports a real unemployment rate of 24.2%, while the U.S. Department of Labor reports a real unemployment rate of 3.8%."

Bitcoin Price May Rebound if Coinbase Premium Turns Negative

Since reaching an all-time high of $73,835 on March 14, Bitcoin has experienced a prolonged downtrend. According to CryptoQuant data, the Coinbase premium index, which reflects BTC price trends, has fallen from $0.08 to nearly zero during the same period.

The Coinbase premium index represents the percentage difference between the BTC/USDT pair on Binance and the BTC/USD pair on Coinbase Pro.

CryptoQuant analysts explain that the Coinbase premium index is an important "leading" indicator that can be used to predict BTC price trends.

Historically, if this indicator turns negative and reverses from a downtrend to an uptrend, BTC prices have always rebounded, as shown in the chart below.

The analyst added that as of the time of writing, although the Coinbase premium index is currently positive, it is "close to zero," and "if historical patterns repeat, if we wait a bit longer after the trend turns negative to invest in the rebound, we may have a better chance of success."

Cryptocurrency trader Mustache expressed an optimistic view, believing that the current trend should lead to a more sustained rise, similar to previous halving cycles.

In a post on X on May 13, he commented, "Before BTC rises to $80,000, Weak Hands need to be washed out of the market. It has always been this way. The structure is the same, just the prices are different."

Short-Term Holders May Influence Trends

On the other hand, analysts at cryptocurrency investment firm Ryze Labs stated in their weekly report that the behavior of short-term Bitcoin holders (or those holding tokens for less than 155 days) may significantly influence the market in the coming months.

Ryze Labs noted that in three instances, 94% of both long-term and short-term Bitcoin holders were profitable: from mid-November 2017 to mid-April 2018, from mid-February 2021 to mid-April 2021, and most recently, from late February 2024 to early April 2024.

The value of Bitcoin held by short-term investors peaked at $117.8 billion in 2017 and $289.9 billion in 2021. During this period, long-term holders and miners sold Bitcoin to short-term holders who held for less than 155 days.

However, after these peaks, the losses for short-term holders quickly increased, leading to a reversal of the cycle where short-term sellers sold to long-term holders. The team observed that historically, this shift has led to significant declines in Bitcoin prices over the next four to six months.

The analyst stated, "In the recent cycle, the value of Bitcoin held by short-term holders is $218.9 billion. While most were initially profitable, they have started to sell actively. About a month after this period, the maximum decline in price relative to the peak of that period was approximately -6%. Supported by institutional demand due to improving macroeconomic conditions, the current cycle may differ from previous ones. However, if these supporting factors weaken, Bitcoin prices may experience declines similar to past cycles."

FxPro trader Alex Kuptsikevich stated in a report on Monday that the price trend is characterized by a series of lower lows and lower highs, indicating signs of investors selling as prices rise.

Kuptsikevich believes that a drop below $60,000 could trigger panic selling, but for now, the greater likelihood is that prices will rise above $65,000, with the 50-day moving average from early May being a key technical level to watch.