Bitcoin arrives at a decisive moment this week, on the eve of the highly anticipated release of inflation data in the United States, this Tuesday, February 12, 2024. Consumer Price Index (CPI) figures for January will set the tone for bitcoin’s price trajectory in the coming weeks and could produce high volatility in crypto markets.
Market expectations and key levels to watch
Currently, bitcoin is trading around $49,000, after a series of seven consecutive sessions of increase until last Sunday. However, the price hits a resistance zone around $48,500, a level where around 800,000 addresses hold nearly 270,000 BTC, at an average purchase price of $48,491.
Expectations are high ahead of the release of US inflation data on Tuesday. The consensus expects inflation to slow to 2.9% in January, compared to 3.4% in December, as well as underlying inflation to 3.7%, after 3.9% the previous month. Any upside surprise would constitute a hawkish signal and risk pushing the dollar up.
As bitcoin is very sensitive to CPI figures, which reflect the erosion of purchasing power, this report will be closely monitored. If inflation decelerates less than expected, the FED could delay a rate cut, which would weigh on bitcoin. Conversely, lower inflation would encourage positive monetary easing for cryptos.
The short and medium term outlook for the price of bitcoin
In the short term, the main directional catalyst will be the publication of the CPI tomorrow. A marked slowdown in inflation should allow bitcoin to break through the resistance at $48,500 and accelerate towards $50,000. Conversely, a bad surprise on the inflation side would likely cause it to fall towards the $45,000 support.
In the medium term, the trend seems constructive for bitcoin, driven by positive structural factors. Adoption continues to grow, as evidenced by record flows into ETFs in recent weeks. Additionally, mining remains profitable despite falling prices, supporting long-term accumulation and safe storage of bitcoin.
Some analysts believe that the down cycle is probably over and that a lasting recovery is on the horizon. They cite the extreme oversold of the past few months, as well as the approach of the 2024 halving, traditionally bullish for bitcoin. A goal of $70,000 by the end of the year, an increase of 50% from current levels, seems reasonable according to them.
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