Bitcoin ($BTC) The US inflation report could go into next week’s US inflation report with less support than the last two CPI releases, increasing the risk of a pullback towards $70,000.
Important points:
- The Cleveland Fed currently projects that the headline CPI will rise to 3.56% in April compared to the same month last year.
- $BTCRising wedge pattern could trigger a decline towards $70,000
Fed expects headline inflation to rise 0.26%
According to the Cleveland Fed’s latest inflation nowcast, the CPI is expected to rise 3.56% year over year in April, up from 3.3% in March.
YoY inflation expectations for April and May. Source: Cleveland Fed
The monthly CPI is expected to be 0.45%, down from 0.9%, while the core CPI is expected to be 2.56% year-on-year and 0.21% month-on-month (previously 2.6% and 0.2% month-on-month). The official April CPI report is scheduled to be released on May 12th.
As a result, the inflation situation is mixed. Even if the monthly pace slows and core inflation becomes more or less stable, headline CPI is expected to accelerate again.
For risk assets, this is not an ideal setup. A strong annual CPI could still reinforce the view that the Fed has little room to cut rates quickly and is likely to weigh on speculative trades such as Bitcoin.
Probability of target interest rate for December Fed meeting. sauce: CME
Nevertheless, despite the recent CPI hike, Bitcoin has avoided further decline.
for example, $BTC Prices rose more than 15% after March’s CPI report showed headline inflation rose to 3.3% from 2.4% in February.
One reason is that institutional buyers absorbed over 500% of the newly mined Bitcoin supply, and strategies accounted for the majority of those purchases.
$BTC/USD daily chart and institutional purchase market capitalization. Source: Capriol Investments
That support now appears to be weakening. strategy has been suspended $BTC Meanwhile, the company’s STRC preferred stock continues to trade below its $100 par value.
If STRC trades below par, the efficiency of new stock issuance will be reduced, limiting the strategy’s ability to raise new funds to purchase further Bitcoin.
Strategy’s weekly Bitcoin purchase forecast. sauce: STRC.LIVE
This weakening of support could in turn further expose Bitcoin to different CPI reaction patterns.
Analyst Kira said in a post on Sunday that major companies could become risk-averse in the wake of inflation announcements, noting a similar pattern of caution regarding the 2025 CPI event.
$BTC/USD performance after CPI announcement. Source: TradingView/Killa
“The key level to maintain is the weekly level of $78,600. If it loses, $74,000-$75,000 is the next downside target,” he said, adding:
“I would like to watch for a significant uptick in liquidity around this pivot to suggest the next move.”
$BTC Wedge hints at further decline towards $70,000
From a technical perspective, Bitcoin is recording a classic rising wedge pattern on the daily chart.
An ascending wedge is considered a bearish reversal setup and typically resolves once the price breaks below the lower trend line and falls to the maximum height of the structure.
$BTC/USD daily chart. Source: TradingView
As of Sunday, $BTC It was moving towards the top of the wedge, where the two trend lines converge, at around $84,000. A breakdown from this level could result in a decline towards the wedge’s measured downside target near $70,000.
Related: Profit-taking could ‘accelerate’ as Bitcoin price reaches three-month high: Analyst
Conversely, a break above a crest that also coincides with the 200-day exponential moving average (200-day EMA, blue line) could completely invalidate the bearish setup.
In this scenario, the next potential upside target is in the $90,000 to $95,000 range.
This article was created in accordance with Cointelegraph’s editorial policies and is for informational purposes only. It does not constitute investment advice or recommendations. All investments and trading involve risk. Readers are encouraged to do their own research.
