On April 12, Bitcoin (BTC) saw a spike in its price prior to the Wall Street open as the Consumer Price Index (CPI) for the United States outperformed market forecasts. Data from TradingView and Cointelegraph Markets Pro showed that BTC/USD neared new 10-month highs on Bitstamp.
After the release of the CPI data for March, widely predicted volatility entered the market. The year-on-year increase in CPI data was below the market assumptions by 0.2%. The U.S. Bureau of Labor Statistics confirmed that the all-items index increased 5.0 percent for the 12 months ending March, which was the smallest 12-month increase since the period ending in May 2021.
Despite the slightly lower-than-expected CPI data, the crypto market showed optimistic upside, indicating potential further upside for equities as well. Markets commentator Tedtalksmacro called the CPI result a “great inflation print for the bulls.”
With CPI known as a classic catalyst for “fakeout” price action, caution was urged by market participants. Popular analytics resource Skew predicted that the “market will hunt liquidity like every other CPI day,” with significant moves that could spark liquidations on exchanges. Another post on Twitter commented on the likely U.S. macroeconomic policy path going forward: “probably one more hike. May data needs to confirm interest rate hike shock in order the FED to actually consider a pause in the hiking cycle.”
Despite the optimistic CPI data and positive market reactions, the market expectations on rate hikes moved only modestly. According to CME Group’s FedWatch Tool, there was only a 65% chance of a rate hike taking place at the next Federal Open Market Committee (FOMC) meeting in three weeks’ time, down from 75% before the release.
The latest BTC price action further bolstered longer-timeframe bets that Bitcoin had conducted a break of its bear market. Popular trader and analyst Rekt Capital noted that BTC/USD was continuing to build on its impressive daily close from April 11, which had taken it above a major resistance trendline. “BTC is showing initial signs of a successful retest of the Higher High resistance into new support,” his latest analysis stated.
The optimism around Bitcoin’s ongoing trend and the crypto market’s reaction to the CPI data indicates that Bitcoin and other cryptocurrencies are becoming more mainstream and less volatile. However, caution is still urged, as the crypto markets remain highly volatile and subject to sudden changes due to macroeconomic factors. As always, investors and traders should do their thorough research before making any investment decisions. The views and opinions expressed in this article are the author’s alone and do not necessarily reflect the views and opinions of Cointelegraph.