Bitcoin Price Prediction as US Core Inflation Rate Data is Announced – Time to Buy?

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As the US announces its latest core inflation rate data, investors and traders alike are keenly focused on its implications for the cryptocurrency market, particularly Bitcoin (BTC).  The world’s largest cryptocurrency, BTC, extended its upward trend and briefly surged to $42,069 in response to the November US CPI data release.

The crypto market has recently experienced a bullish turn following the United States reporting a significant decline in its annual Consumer Price Index (CPI) to 3.1%. This news has prompted a rebound in the price of Bitcoin, recovering from a worrisome low of $40,000.

#Bitcoin continues to consolidate after a bounce from the area I've mentioned yesterday.

CPI day today, would suggest volatility is going to pick up between that and FOMC tomorrow.

Remain patient.

Just buy the levels which are clear and wait. pic.twitter.com/4CNGwsPRkH

— Michaël van de Poppe (@CryptoMichNL) December 12, 2023

However, the sharp uptick in BTC was short-lived as its price dropped back to the $41,000 level.

US Inflation Data and Market Reaction: Impact on Fed Policy Speculation

The Bureau of Labor Statistics today released the much-awaited US Consumer Price Index (CPI) data, showing a 3.1% rise in U.S. inflation for November.

The market, which was expecting a softer inflation figure, now reinforces the belief that the Federal Reserve will maintain interest rates in its year-end meeting.

According to the latest data from the Labor Department, inflation in November increased by 0.1%, matching market expectations. The overall annual inflation rate stood at 3.1%, slightly down from the 3.2% reported in October.

CIBC provides a reaction to the November US Consumer Price Index (CPI) report, interpreting the data as a mix of positive and negative signals, potentially indicative of market noise rather than a clear trend. pic.twitter.com/2YLLivzmvP

— Omar NAMOUCHI (@omarnamouchi) December 12, 2023

Examining the Core CPI, which excludes food and energy prices, there was a 0.3% increase, aligning with market forecasts. Annually, the core inflation rate showed a 4% increase, consistent with market expectations for November.

Investors were closely monitoring this economic data for insights into the economy’s trajectory. Despite the Fed’s data-driven commitment, the dip in inflation and signs of a cooling labor market have spurred speculation about a potential shift in policy.

Based on Fed Funds futures pricing data, the market currently expects 4 rate cuts next year.

13Dec23: no rates change (98.4%)
31Jan24: no rates change (94.4%)
20Mar24: no rates change (61.0%)
1May24: first cut (50.0%)
12Jun24: second cut (40.9%)
31Jul24: no change (37.2%)…

— AJ (@alojoh) December 11, 2023

Following the CPI data release, the US Dollar Index fell by 0.39% to 103.329 on Tuesday, while the US 10-year Bond Yield decreased by 1.76% to 4.194.

The CME Fed Watch Tool now indicates a 98.4% probability that the central bank will pause its rate hike stance at the conclusion of the upcoming Fed meeting on December 13. The release of the US CPI data triggered a temporary drop in Bitcoin (BTC) to $41,000, reflecting market uncertainty.

However, the overall impact remains subject to change, shaped by broader economic sentiment and ongoing market dynamics.

BlackRock’s Bitcoin ETF Bid: Market Impact and SEC Wariness

BlackRock is seeking to facilitate bank participation in its Bitcoin ETF, pending regulatory approval. The plan involves transferring risks to cryptocurrency market makers and introducing a novel method for redeeming ETF shares, a strategy discussed with Nasdaq and the SEC.

The approval of this ETF would enable investors to gain Bitcoin exposure without the need to purchase or store the cryptocurrency directly, potentially channeling significant capital into the crypto market.

Nevertheless, the SEC maintains a cautious stance, particularly due to concerns about potential market manipulation in Bitcoin. A decision on BlackRock’s application is anticipated by January 15.

Thus, the prospect of BlackRock’s Bitcoin ETF, if sanctioned, could be a catalyst for a surge in BTC prices by paving the way for greater institutional investment. However, the prevailing uncertainty surrounding the SEC’s approval may temper market sentiments.

Bitcoin Price Prediction

In our current technical assessment of Bitcoin as of December 13, the cryptocurrency is seen in a precarious position. The 4-hour chart reveals critical price points, with the first line of resistance at $41,665. Surpassing this could lead to further resistances at $42,349 and $42,929.

Conversely, Bitcoin finds its initial support at $40,780, with additional support levels at $39,827 and $38,364. The technical narrative is complex. The Relative Strength Index (RSI) is at 37.99, suggesting a bearish outlook as it stays under the 50 mark.

The 50-Day Exponential Moving Average (EMA) stands at $42,345, indicating a bearish trend as Bitcoin’s current price is below this level.

The chart pattern displays a downward trend, especially as Bitcoin’s price hovers below the $42,345 support. Remaining under this threshold could further confirm the bearish trend.

Given these technical indicators and chart patterns, the overall sentiment for Bitcoin appears to be leaning towards bearish.

Nevertheless, the immediate future is marked by caution; a breakthrough above key resistance levels, particularly the 50 EMA, could signal a change to bullish sentiment. Market watchers should prepare for the possibility of Bitcoin retesting the $40,780 support level soon.

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