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Crypto traders and investors are gearing up for what could be a volatile week ahead, as the release of the Consumer Price Index (CPI) for March and fresh insights into Federal Reserve policy are expected to influence the market as usual.
The Impact of the CPI Release on Bitcoin
Bitcoin in particular has shown to be greatly impacted by CPI data every single month. The king of cryptocurrencies has started the week on a positive note, with bulls pushing its price to a new 10-month high. Moreover, traders are now eyeing the $31,000 resistance level, which after the way BTC crossed $30k now seems to be an easy feat.
Analysts have suggested that pre-release is a good time to de-risk, as traders are likely to pause on risk before the event. The CPI prediction for March is for a 5.22% year-over-year increase, and while actual data has been at or below the Cleveland Fed’s prediction 73% of the time, traders are still cautious about the potential market impact.
Expert Tips On Trading Bitcoin Ahead Of The CPI Release
Famous technical analyst Michaël van de Poppe predicts that consolidation is likely to occur before the CPI release, which could make or break the momentum. He advises that the trend remains up for Bitcoin.
Macroeconomic and stock market expert James Choi suggests that traders should also consider the impact of the U.S. dollar, which is on a three-month freefall. The CPI release could set the dollar strength on a downward trajectory, paving the way for some potential relief on risk assets like Bitcoin.
Analyst Tedtalksmacro advises that traders should be cautious of the $34,000 resistance level, which he believes is the true resistance for Bitcoin. He suggests that traders should consider de-risking before the event to avoid potential market impact.
Technical data shows that volatility correlations between Bitcoin and traditional risk assets are inverting, while sentiment data suggests little appetite for sudden selling among the hodler base. This suggests that traders are optimistic about Bitcoin’s performance, despite the potential market impact of the CPI release, according to Ted.
The crypto analytics provider Kaiko has also revealed that Bitcoin is on a diverging path from equities when it comes to volatility, with Bitcoin experiencing increased volatility while the Nasdaq cools. At the time of writing, Bitcoin was worth $30,078.