Yerevan (CoinChapter.com) — Bitcoin fell by more than 50 percent at one point in time after establishing a record high near $65,000. Still, the flagship cryptocurrency is now fighting its way back upwards, driven by accumulation sentiment near technical lows and an ultra-supportive inflation report.
The May report for the consumer price index (CPI), released Thursday, showed that inflation rose 5 percent year-on-year. That marked the highest core CPI jump since June 1992. Bitcoin slept through the event as it fought its own demons of overvaluation risks and regulatory hurdles. But during the weekend, when the traditional markets were taking a break, the cryptocurrency jumped incredibly.
Now, it does not mean Bitcoin, a provably scarce asset, reacted to the inflation report almost 72 hours later. But its 13.74 percent weekend pump came ahead of the high-profile meeting that would see how central bank officials in the United States would react to a tall CPI.
The Federal Open Market Committee, or FOMC, is scheduled for a two-day meeting that would conclude with a policy statement and chief Jerome Powell’s press brief. Investors want to know how the Federal Reserve would handle reports of higher inflation and whether the CPI data sticks with their view that soaring prices are transitory.
A rate hike could prove bad for Bitcoin’s ongoing upside correction. Conversely, holding existing policies steady, including near-zero interest rates and an indefinite bond-buying program worth $120bn a month, could provide more bullish backstops to the king cryptocurrency.
Meanwhile, the $29,000-30,000 level range has supported multiple occasions since the Elon Musk-led May 19 crash. So it appears, traders and investors still believe that Bitcoin could reclaim levels near $65,000 or even surpass them to claim fresh highs (towards $100K?). All and all, the weekend pump attests to the fact that Bitcoin’s bull market is far from over.
“The accumulation/distribution remains rock-solid, having risen very steadily over the past year as buyers pick up Bitcoin on dips,” wrote market analyst Josh Arnold in his SeekingAlpha piece Monday, adding that the A/D indicator is not foolproof by any means” but it is still a “key for bullish moves.”
Bitcoin investors gather
If Elon Musk can crash the Bitcoin market single-handedly, then a bunch of supportive hedge fund managers gathering under a roof to speak about “best idea” pitches could pump the cryptocurrency all the way upward.
This week’s Robin Hood Investors Conference is set to feature speeches from leading fund managers that have supported Bitcoin in recent history. That includes Stanley Druckenmiller, Ray Dalio, Paul Tudor Jones, and Cathie Wood.
But take notice that Bitcoin still has to battle a stubborn resistance level near $40,000 before confirming its short-term bullish bias. It is possible that the cryptocurrency merely crashes back to $30,000 after facing selling pressure near the said price ceiling.