Bitcoin cracks $28K on CPI amid warning US inflation ‘highly elevated’

Bitcoin joins altcoins in reacting strongly to CPI data coming in below estimates, with BTC price clawing back ground toward $30,000.

Bitcoin (BTC) ticked higher around the May 10 Wall Street open as United States inflation data beat expectations.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Markets eye June Fed rate hike pause

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD responding instantly to the April Consumer Price Index (CPI) print, up 1.7% on the day.

The pair saw local highs of $28,328 on Bitstamp before consolidating immediately above the $28,000 mark.

The CPI had come in at 4.9% year-on-year, a shade below the expected 5.0%. This gave a clear signal that U.S. inflation was continuing to decrease, once more in line with predictions from both the Federal Reserve and external sources.

Headline CPI for April came in at 4.9% this morning, which continues the disinflationary trend. pic.twitter.com/e5MResLeKC

— Lyn Alden (@LynAldenContact) May 10, 2023

“Fed’s data dependency kicking off well, strong jobs data and now inflation as expected… pause in June at this stage,” financial commentator Tedtalksmacro wrote in part of a Twitter response.

Tedtalksmacro referenced the impact of CPI and other economic data on Fed interest rate policy, with markets already expecting a pause in rate hikes next month.

Fed Chair Jerome Powell has repeatedly stated that such data prints dictated policy to a significant degree.

A rate hike pause would constitute a boon for risk assets, including crypto, as slackening financial conditions should increase investor appetite for risk.

Data from CME Group’s FedWatch tool showed market expectations of a June pause jumping from 80% to 90% on CPI.

*Fed target rate probabilities chart. Source: CME Group*

While Bitcoin and altcoins made modest gains, however, investment research platform Game of Trades warned that the day’s CPI numbers showed that the U.S. economy was not yet out of the woods.

“The decrease in inflation is mainly driven by the flexible part of the CPI. The sticky part still remains extremely elevated,” it told Twitter followers.

*U.S. CPI annotated chart. Source: Game of Trades/Twitter*

Bitcoin traders “protecting” key trend line

Prior to the CPI release, on-chain analytics resource Material Indicators was eyeing Binance order book composition for future BTC price clues.

Noting reducing volume near the current spot price, it added that bids were attempting to protect the integrity of the 200-week moving average (MA) just above $26,000.

“Remember that liquidity dampens volatility. FireCharts shows some decent bid liquidity protecting technical support at the 200 Week Moving Average. The upside currently has less volume near the active trading range,” it summarized in part of the days commentary.

*BTC/USD order book data (Binance). Source: Material Indicators/Twitter*

Bitcoin has traded above the 200-week MA since mid-March.

*BTC/USD 1-week candle chart (Bitstamp) with 200MA. Source: TradingView*

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.