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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Bitcoin Aims For $48K? BTC Reacts Upward To U.S. Inflation Report

Reynaldo Marquez
Reynaldo Marquez
1 year ago
2 mins read
Picture of gold bitcoin on top a circuit board

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Bitcoin has seen some relief in the past couple of days with a 4.5% profit in 24-hours. The first crypto by market cap trades at $42,947, after climbing back from the lows at around $39,000.

Bitcoin BTC BTCUSD
BTC trends to the upside in the 1-hour chart. Source: BTCUSD Tradingview

Related Reading | TA: Bitcoin Bounces To $42K, Why BTC Could Recover To $43.5K

The recent bullish price action comes at the heels of the most recent Consumer Price Index (CPI) report published in the U.S.; the metric has become one of the top issues for investors around the world. Used to measure inflation in U.S. dollars, the CPI printed a 7% for December 2021.

The metric recorded a percentage below investors’ expectations and was mostly one of the reasons Bitcoin saw a quick recovery. However, it stood at a 40 year high suggesting the issue will remain a priority for financial institutions across 2022.

As seen below, individual inflation data paints a different picture with many sectors reaching double digits for their year-over-year periods. This includes medical care with 37.3%, transportation with 21%, and energy with 29.3%.

The whole inflation misery in one chart! US inflation of 7% is highest since 1980s. Monthly price increases come in higher than expected. Used cars, food, clothing drive price gains. (Chart via @MOstwald1) pic.twitter.com/mJOCun6UOK

— Holger Zschaepitz (@Schuldensuehner) January 12, 2022

Inflation has caused the U.S. Federal Reserve and its Chairman Jerome Powell to hint at tapering and an increase in interest rates. At the moment, inflation fears have been reduced, but could soon return to justify a shift in the financial institution’s monetary policy. According to Yuya Hasegawa, analyst for bitbank:

(…) if the CPI and PPI turn out to be higher than the market expects, they could rekindle inflation fear and, in turn, also justify the first-rate hike as early as this March. According to the CME’s FedWatch, almost 70% of the market participants are expecting the March rate hike, so bitcoin may be able to defend $40k in case of another sell-off, but it certainly is not the time for optimism in the short run.

Bitcoin, More Blood In The Short Term?

Therefore, the analyst believes $44,000 to $48,000 to operate as short-term important resistance levels. A break above the latter could push Bitcoin to the high of its current range, near $50,000, otherwise, the crypto could re-visit the lows, as it has been moving over the past weeks.

Data from Material Indicators indicates very little support for Bitcoin below its current levels. Over $12 million in bid orders are stacked in the $39,000 to $40,000, with around the same amount in ask orders around the $44,000 to $45,000 area.

Bitcoin BTC BTCUSD
Bid order for Bitcoin (price in blue) that could act as support near $40,000. Source: Material Indicators

This goes to show the uncertainty in the market, but with Bitcoin still holding on to some bullish price action. If the inflation metrics in the U.S. continue to trend to the downside or below investors’ expectations, the first crypto could resume its upside trend with more strength in the coming months.

Related Reading | President Bukele Predicts BTC At $100k With Hope That More Countries Adopt It As Legal Tender

Jan Wüstenfeld, analyst for CryptoQuant, wrote the following on the CPI and its potential impact on BTC’s price in the long term:

(…) if it (inflation) continues coming down in the next months this would be the perfect excuse for the FED to reverse its hawkish stance, which would be bullish for Bitcoin.

Bitcoin BTC BTCUSD
Source: Jan Wüstenfeld via Twitter
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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

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