The cryptocurrency market has been volatile in recent weeks, with Bitcoin and Ethereum experiencing significant price swings. Traders and investors closely monitor the impact of macroeconomic data on digital asset prices. Today, all eyes are on the consumer price index (CPI) and US retail sales figures, which are expected to provide insight into the strength of the US economy and inflationary pressures.
Fundamental forecast of the crypto market
Bitcoin and Ethereum have rallied significantly in recent weeks, with BTC hitting a nine-month high above $26,000 and ETH breaking through critical resistance at $1,700. However, the reason for their increase can be attributed to the mildly encouraging inflation data released earlier and the continued recovery of the financial industry after the near-catastrophic disaster.
The latest statistics show that consumer inflation in the US has eased but still remains high. This could force the Federal Reserve to maintain its aggressive stance. If macroeconomic factors remain favorable, Bitcoin may soon reach the $30,000 mark.
Despite recovering some of its early gains, Bitcoin still remains 80% higher than its lowest point. Bitcoin and ETH are currently trading at $24,900 and $1,700 respectively. These positive market movements indicate that the digital currency market is experiencing positive sentiment.
Moreover, the rise in Bitcoin prices gained even more momentum after the UK government expressed its support for Silicon Valley Bank. This news caused a favorable mood among investors, which led to an increase in buying activity.
The increase in the value of BTC reflects a positive attitude towards the digital currency industry. Therefore, investors should carefully monitor market developments before making any important investment decisions.
Impact of CPI on Bitcoin Prices
The recent publication of the February 2023 Consumer Price Index (CPI) statistics by the US Department of Labor had a significant impact on Bitcoin prices.
The CPI measures the average change in consumer prices for a basket of goods and services, and it rose 0.4% on a seasonally adjusted basis last month.
However, the headline inflation index increased by 6% compared to the previous year, causing concern among investors.
While the release of the CPI data caused turbulence in traditional markets, cryptocurrency markets reacted positively as Bitcoin and Ethereum prices rallied. This indicates that investors are turning to digital assets as a potential hedge against inflation.
It is worth noting that the CPI is a key tool for evaluating economic performance, determining monetary policy, and adjusting wages, benefits, and social security payments for inflation. Therefore, rising inflation may prompt the Federal Reserve to take a more aggressive stance.
As a result, traditional financial markets could be adversely affected if the Fed decides to raise interest rates in response to rising inflation. Conversely, it may encourage more people to invest in Bitcoin and other cryptocurrencies as an alternative investment option.
While rising inflation is certainly a cause for concern, it is unclear how it will affect the global economy in the long run. Nevertheless, the rise in Bitcoin prices following the release of the CPI statistics suggests that the digital asset is gaining recognition as a viable hedge against inflation in the short term.
US Retail Sales Report Forecast for February and its Potential Impact on Bitcoin Prices
The US Census Bureau is set to release its February retail sales report on March 15. Economists and researchers from eight major banks provided their forecasts for future data.
In the U.S., retail sales are expected to fall 0.3% year-on-year, a significant drop from January’s 3.0% increase. However, excluding cars, sales are forecast to rise 0.2% year-on-year, up from 2.3% in January. Also, the benchmark used to calculate GDP is expected to fall 1.2%, compared with a 1.7% rise in January.
It’s worth noting that retail sales data is an important indicator of the health of the US economy, as consumer spending makes up a large portion of GDP. Thus, the expected decline in retail sales may signal a slowdown in the US economy, potentially having a negative impact on traditional financial markets. However, cryptocurrencies such as Bitcoin are likely to benefit as investors may seek alternative assets during times of economic uncertainty.
As a result, the impact of retail sales data on BTC prices will depend on how investors interpret the news. A more than expected drop in retail sales could boost BTC prices as investors look for safe-haven assets.
Conversely, better-than-expected sales figures could lower BTC prices as investors shift their focus back to traditional assets. Overall, the upcoming release of retail sales data is expected to have a significant impact on financial markets and may affect the price of BTC in the short term.
Bitcoin price
At $24,850 on Wednesday, the BTC/USD pair was showing a bullish trend. Bitcoin may face immediate upside resistance at $25,250. If this level is breached, there will be more buying opportunities with a potential move to $26,700.
However, if Bitcoin’s current support level of $24,000 is breached, it could lead to further selling pressure, potentially pushing the price down to the $23,750 level. Traders may consider buying if the price breaks above $25,225 today.
Ethereum price
Ethereum is currently at $1,700 and is currently facing strong resistance near the $1,710 level, with a double top pattern continuing this resistance. A break above this level could push the price of ETH towards the $1,800 mark.
On the downside, Ethereum’s immediate support is at $1,600 or $1,495. Investors will be keeping a close eye on US CPI and retail sales data today.
