Bitcoin inches up as BTC traders flip bullish on the back of positive CPI data

Bitcoin inches up BTC traders flip bullish on the back of positive CPI data
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  • BTC/USD pair nears $47,000 in a 6% intraday rally amid dipping US dollar strength.
  • Thawing consumer prices in the United States turned Bitcoin traders bullish.
  • MicroStrategy bought the Bitcoin dip.

JAIPUR (CoinChapter.com) – Bitcoin resumed its uptrend nearing $47,000, as bullish daytraders swapped the US dollar for the cryptocurrency en-masse. Buyers assessed the diminishing rate of consumer price rise in the United States and Bitcoin’s oversold conditions to place long bids on the BTC/USD pair. As a result, prices rose 6% from $44,154 to $46,823 on Tuesday.

Positive August CPI Data

Tuesday’s consumer price index (CPI) data signaled a slowdown in inflation in the US. CPI represents the weighted average of the prices of a basket of goods and services such as transportation, food, and medical care. As per the Bureau of Labor Statistics, August’s CPI reading of 5.3% fell short of the 5.4% figure predicted by economists.

Consumer prices rose 0.3% in August over July, which is less than July’s rise of 0.5% over June and notably below June’s figure of 0.9% increase over May. Core CPI reading, which excludes food and energy prices, also dipped to 4% year-on-year from 4.3% recorded in July.

Related: Crypto market maintains a strong footing as US inflation rises another 0.5% in July.

August’s CPI data pointed towards decreasing inflationary pressures in the food and transportation sectors. However, at 5.3%, inflation is still at its highest level since 2008.

Risk-on asset markets such as stocks and stock futures, including Bitcoin, rose to the latest CPI readings. Despite August’s slow pace, Bitcoin investors also gauged the continuing trend of high inflation rates (in the near term). Consequentially, BTC/USD buy bids rose exponentially, amid consumers’ expectations of inflation to trend around 5.3% over the next ten months.

Bullish traders also anticipated the Federal Reserve to retain the pace of its monthly purchase of $120 billion worth of securities. Given the egregiously dismal performance of the US labor market in August. The same would lead to the US dollar losing its strength further, which would push Bitcoin’s value up. The said scenario is currently playing out as of writing.

Related: Bitcoin ticks above $50,000 as US labor market growth stalls amid Delta variant concerns

The US dollar printed a downtrend in response to positive August CPI data
The US dollar printed a downtrend in response to positive August CPI data. Source

MicroStrategy Bought The Bitcoin Dip

Amongst the recent wave of Bitcoin buyers who capitalized on Monday’s dip is MicroStrategy. The Michael Saylor-led firm announced a purchase of 5,050 BTC, worth approximately $240 million as on the previous trading session.

The company has garnered a stellar reputation for being a voracious accumulator of the leading cryptocurrency in recent times. Saylor’s company started “stacking sats” back in August 2020, and at the moment, holds 114,042 “whole coins.”

Related: MicroStrategy goes for a fresh batch of Bitcoin, buying the dip. Again.

BTC/USD Technical Setup

The recent upward move saw Bitcoin break out of its Descending Channel trend supported by frantic buying activity (courtesy of MicroStrategy). However, the rally led the BTC/USD pair into overbought territory. Sellers leveraged the opportunity to surprise bulls and log quick profits off the run-up towards $47,000.

A brief bout of bearish/sideways phase may follow, but given the strong rallying momentum, buyers would likely join the game back again to pull Bitcoin up above $47,650. Bitcoin closing above the said price would be the necessary impetus to climb towards the $52,687 resistance.

Bitcoin buyers need to close above  $47,650 for now
Bitcoin buyers need to close above $47,650 for now. Source: BTCUSD on TradingView.com

Traders betting with leverage can utilize the opportunity to place long bets, but only after carefully assessing technical setups and the macroeconomic scenario. Twitter-based Bitcoin and crypto analyst Kaleo’s observations could come in handy: 

“The longer we main above support from the summer base range breakout, the likelier it is that the September bottom is in (though I expect another few weeks of chop in the current range). Study the cycles. What happens next should be fun. $100K+ is imminent.”

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