Bitcoin price flirts with $30,000 level after lower-than-expected US inflation data
The US Consumer Price Index (CPI), an economic indicator that is considered a measure of inflation, largely influences US Dollar dynamics and could help market participants predict the direction in which risk assets like Bitcoin and altcoin prices are headed.
The US Bureau of Labor Statistics reported a 3.2% increase in inflation, on a yearly basis, in July. This reading came slightly below the market’s expectation of 3.3%, and the impact on Bitcoin price is largely uncertain.
Bitcoin traders likely to scale up their exposure to risk assets
With the July US CPI data slightly below consensus, there is scope for the Federal Reserve to stay hawkish for a while, introducing downside volatility to risk assets like Bitcoin.
Given the spike in Bitcoin’s social volume over the past thirty days, it is likely that more traders scoop up BTC at discounted prices and await forward-looking macroeconomic indicators to signal a recovery in the cryptocurrency’s price.
Moreover, the CPI is one of the most widely used measures of inflation and the July reading signals that the Federal Reserve has been effective in reducing liquidity in the system. The impact of inflation as an economic indicator, on Bitcoin, is rather uncertain with BTC price ranging below the $30,000 post the July data release.
Bitcoin price is currently above its three long-term Exponential Moving Averages (EMAs), 10, 50 and 200-day at $29,530, $29,349 and $27,177 respectively.
Inflation has driven Bitcoin to its all-time highs previously. BTC price rallied to the $65,000 level during the period of Fed’s monetary policy expansion in 2021. During this period there was a consistent increase in inflation and this aided BTC’s comeback through a massive price rally.