Bitcoin (BTC) holds firm despite poor US CPI data

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The US Consumer Price Index (CPI) figure for March surprised analysts with a higher-than-anticipated reading of 3.5%. This unexpected increase in inflation isn’t favorable for financial markets, causing most indices to decrease. However, despite the initial drop, Bitcoin has managed to maintain its support and is currently trading around $70,000. The accumulation phase for Bitcoin persists.

Inflation hedge?

Bitcoins are frequently discussed as a protection against inflation, but so far, this hasn’t generally been the case. However, during this current bitcoin price surge, the situation has shifted. Traditional financial markets are now investing in Bitcoin, and if institutions believe that Bitcoin truly functions as an inflation hedge, then their belief could create a self-fulfilling prophecy.

Inflation is stealing wealth

In simple terms, a larger Consumer Price Index makes it difficult for most assets to grow, and may signal that upcoming interest rate decreases are unlikely. The Fed’s goal of 2% inflation seems increasingly unattainable, and it might be necessary for interest rates to remain elevated for an extended period.

The Fed faces a challenging dilemma: on one hand, inflation is resurfacing, while on the other, the economy requires interest rate reductions to prevent a potential recession.

In our present monetary system based on fiat currency, most people accept a consistent 2% inflation rate as the norm. However, isn’t it questionable why we should all endure this, which essentially amounts to the theft of wealth over generations? If inflation surpasses 2%, the system edges closer to collapse. In such a scenario, Bitcoin stands out as a potential savior.

Positive $BTC short term price action

In the brief term analysis of Bitcoin ($BTC), the price has surpassed the triangle and trendline again, confirming its position above the significant support level at $69,000.

In simpler terms, the upcoming bitcoin halving, which reduces the daily mining reward from 900 to 450 units, is expected to positively influence the price of bitcoin, although the impact may not be immediate.

Bullish scenarios

In an extremely bullish market, if Bitcoin (BTC) reaches a new record high price, it’s probable that it will continue to climb higher as it explores new pricing territories. Even a prolonged period of sideways movement is still considered bullish, as it strengthens the price foundation and sets the stage for even more significant gains when Bitcoin eventually surges upwards again.

If the price drops to approximately $60,000, this is still a possibility and could even signal a stronger bull market in the future. However, if the price dips below $59,000 and holds there, then it may be necessary to reconsider the current bull run.

As of the time this article is published, Bitcoin ($BTC) is almost reaching the significant resistance level of $71,300. If it manages to break through, the path will be clear for the next resistance at $72,800 and an opportunity to reach the all-time high of $73,800. However, if Bitcoin fails to surpass the $72,800 mark, a lower high will result, which could lead to more price fluctuations and sideways movement.

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2024-04-11 13:13