Bitcoin Breakout Halts as U.S. Inflation Data Looms
Bitcoin (BTC) dropped 3% in the past 24 hours, invalidating a bullish breakout, ahead of the release of U.S. inflation data that could dictate when the Federal Reserve (Fed) starts cutting interest rates.
The leading cryptocurrency by market value slipped back into a triangular consolidation pattern identified by trendlines connecting March 15 and March 27 highs and March 20 and April 3 lows. The symmetrical triangle consolidation had ended with a bullish breakout early this week, opening doors for a rally to $80,000.
Failed breakouts often result in short-term traders closing or reversing bullish bets in anticipation of a steeper price decline. Still, Markus Thielen, founder of 10x Research, cautions investors against reading too much into Bitcoin’s bull failure.
“Bitcoin’s failed breakout likely represents nervousness ahead of the U.S. CPI release. I would not write it off yet,” Thielen told CoinDesk in a Telegram chat.
Thielen added that Wall Street’s tech-heavy index, Nasdaq, rose Tuesday, offering positive cues to bitcoin and other risk assets. In other words, bitcoin’s dip could be short-lived. The cryptocurrency closely follows trends in the Nasdaq and the Nasdaq-to-S&P 500 ratio.
The Bureau of Labor Statistics is set to release March 2024 CPI data on Wednesday at 08:30 ET (12:30 UTC).
The consensus is that the consumer price index, a measure of cost of living, has increased by 3.5% since March 2023, accelerating from February’s 3.2% annual inflation rate, according to economists polled by the Wall Street Journal. The monthly pace is forecast to have eased to 0.3% from February’s 0.4% rate.
Similarly, the monthly pace in core inflation, which strips out the volatile food and energy component, is forecast to have slowed to 0.3% in March, following February’s 0.4% gain, equating to a 12-month decline to 3.7% from 3.8%.
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