Bitcoin bounce on potentially good inflation data?

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With potentially good CPI and Core CPI figures being released later today, will Bitcoin and the crypto market lift further?

CPI figures better than expected?

Market feeling appears to be that Core CPI, which includes food and energy, universally recognised as the most important inflation indicator, might only increase 0.2% month on month for August, with a significant number of analysts predicting that inflation could surprise to the downside.

Should inflation data figures be published that reflect what is expected then the Federal Reserve is likely to want to keep interest rates as they are at the next policy-making committee meeting on September 19/20.

Such a move would be very much welcomed by markets, and particularly by the crypto market, which has been more under duress given that it is widely considered to be a risk-asset market.

Bitcoin up ahead of the news

Perhaps with all this in mind, cryptocurrencies are generally up across the board. Bitcoin is consolidating its move upwards on Tuesday, with a recent green candle that has taken it above $26,000 once more.

Bitcoin has been running underneath a resistance at the $26,150 level since August 23 with the odd few spikes above, and it will need to flip this into support as a very first step to reclaiming its upward momentum from the beginning of the year.

Bullish divergence

One bright light on the horizon is the fact that bullish divergence has formed on the daily time frame for the BTCUSD pairing. This does need to be put against a death cross, also on the daily, but if the last bull market is anything to go by, 2 death crosses happened within a 6-month time period before the bitcoin bull run got going in earnest.

Markets looking one year out

With inflation figures potentially coming down, or at least staying stable, markets would likely be pricing at least one year into the future. By this time a recession would likely have hit and the Fed might be expected to have taken its foot off the brakes and started pumping the gas pedal once again.

With liquidity flowing once

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Author: Laurie Dunn

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