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Bitcoin Uptrend Unfazed By Hot Inflation Data: $60K Could Be Next

Published 14/02/2024, 11:04
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  • Bitcoin has recently surged above $50,000.
  • Meanwhile, yesterday's inflation report came in above expectations.
  • If the crypto can stay above $50K, the next psychological barrier is at $60K.
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  • In the last few weeks, we saw the drawn-out correction in Bitcoin and its main rival, Ethereum, come to an end.

    The robust momentum propelled the demand side to breach the psychological barrier of $50,000 per Bitcoin, despite a temporary slowdown triggered by hotter-than-expected US inflation data.

    The current session reflects the dominance of buyers, unaffected even by the strengthening US dollar. This scenario suggests the development of a sustained bull market, driven by the upcoming halving and increased funds flowing into ETFs.

    In this ongoing bull market, not only Bitcoin but also other major cryptocurrencies, led by Ethereum, have reached new highs for the year.

    Sticky Inflation Poses Challenges

    The recently released US inflation data indicates that the Federal Reserve cannot yet declare victory. Both key CPI readings exceeded forecasts, highlighting a de facto consolidation that has persisted more or less since last July.

    Inflation Data

    The dynamics of services prices, which rose by 0.7% month-on-month, contribute to the persistence of above-target inflation.

    This factor discourages the Fed from initiating quick interest rate cuts, especially given relatively strong GDP readings and historical experiences from the 1970s.

    Consequently, the likelihood of rate cuts as early as March is practically ruled out, with the market now shifting its probability assessment to June.

    Conversely, the data on food prices appears optimistic, with the latest reading indicating a 1.2% year-on-year increase, the lowest since June 2021.

    Additionally, fuel prices, particularly gasoline (down 14.2% year-on-year) and crude oil (down 6.4% year-on-year), have seen declines.

    Bitcoin Surges Above $50K

    Bitcoin has already surpassed the $50,000 mark. As anticipated, ETFs reflecting the spot price of Bitcoin are gaining popularity among investors, as evident from the robust inflow dynamics.

    Crypto.com reported a daily gain of $403 million on February 8 alone. Notably, BlackRock (NYSE: NYSE:BLK) and Fidelity products have emerged as the primary beneficiaries, accumulating total inflows of $7.5 billion.


    US Spot Bitcoin ETF

    Source: Crypto.com

    The demand generated by the funds is not being matched by the miners, who are only able to generate about 10-15% of the daily demand, which naturally puts demand pressure.

    After breaking the $50,000 barrier, the next target for buyers is the next psychological barrier of $60,000.

    If this level is broken, then buyers will already be one step away from breaking new historical peaks located in the range of $68-69 thousand.
    Bitcoin Daily Chart

    Possible corrective movements even the shallow ones in the form of a retest of $50 thousand can be considered in the category of the possibility of connecting to the upward trend.

    Ethereum is also gaining, having just broken through this year's maximums falling just above $2,700 per coin.

    Ethereum Daily Chart

    From a technical point of view, the key should be the supply zone located in the $3400 price area, which initiated the dynamic sell-off near $2022.

    Reaching and breaking this area will confirm the strength of the bulls with ambitions to go out near the historical highs.

    ***

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    Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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