The US CPI knowledge is the principle financial occasion of the buying and selling week. Inflation has been the principle driver of financial coverage for greater than a 12 months now; thus, each market participant is on standby till the info comes out.
Crypto merchants loved a pleasant rebound of the whole market in the beginning of 2023. Bitcoin, for instance, rallied near $24k, the place it met resistance.
Bitcoin’s adoption by many institutional buyers made it smart to US financial knowledge. In different phrases, the US greenback’s volatility strikes Bitcoin too. Subsequently, in the present day’s inflation knowledge is a key driver not just for the fiat currencies but additionally for the cryptocurrency market due to Bitcoin’s affect on the general crypto market.
BTCUSD chart by TradingView
Head and shoulders sample factors to a drop under $19k
Crypto fans cheered the robust begin to the buying and selling 12 months as Bitcoin rallied aggressively. However in doing so, Bitcoin solely adopted the general US greenback’s weak spot seen throughout the FX dashboard.
If the US CPI report for January reveals renewed inflationary pressures, the US greenback ought to surge throughout the dashboard.
On such a launch, the market can buy the greenback in anticipation of additional tightening from the Fed. Therefore, the greenback ought to strain Bitcoin.
From a technical perspective, there may be one head and shoulders sample that ought to preserve bulls at bay. The market presently consolidates above the neckline, and if the greenback will get stronger after the CPI report, then the sample’s measured transfer factors to a drop under $19k.
The market shouldn’t climb above the best level within the earlier head and shoulders sample for the sample to work. Extra exactly, it ought to stay under $23,500 for the bearish sample to stay legitimate.