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On April 10, Bitcoin (BTC) reached its highest point in ten months as traders anticipate the April 12 Consumer Price Index report, which may provide further clarity on the Federal Reserve’s efforts to combat persistent inflation. Should the report indicate a decrease in inflation, it could serve as a potential catalyst for BTC’s continued ascent.
On the same day, BTC’s price surged by 3.37% to surpass $29,300 following a subdued Easter weekend. Notably, Bitcoin’s intraday gains coincided with a decline in U.S. equities, marking a rare separation that underscores the cryptocurrency’s waning risk-on traits.
BTC/USD year-to-date returns versus U.S. stock indexes. Source: TradingView
The pre-CPI dynamic could be in effect
The Bureau of Labor Statistics is set to publish the March Consumer Price Index (CPI) data on April 12, which is anticipated to reveal a decline in inflation to 5.1% from the previous year’s 6.0%.
A reduction in the headline CPI enhances the likelihood of the Federal Reserve adopting a more dovish stance. In contrast, ongoing inflationary pressures might prompt traders to speculate on additional interest rate hikes in May.
Bitcoin’s ascent above $29,000 indicates that cryptocurrency traders may be factoring in a decrease in inflation, which could subsequently lead to a potential shift in Fed policy.
However, the U.S. Dollar Index (DXY), which measures the dollar’s strength against a selection of major foreign currencies, increased by 0.7% on April 10, suggesting that macro investors anticipate a rate hike in light of a weaker U.S. stock market.
DXY daily price chart. Source: TradingView
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Indeed, the market estimates a 70% chance of the Fed raising rates by 25 basis points during its May meeting, as indicated by the CME Fed Watch Tool. This expectation may stem from a tightening labor market, which provides the Fed with more justification to continue increasing lending rates in the future.
Could Bitcoin hit $30,000 in April?
From a fundamental standpoint, Bitcoin appears poised to reach $30,000 ahead of the Fed’s FOMC meeting. Nevertheless, its ability to maintain those gains will hinge on the forthcoming inflation data, as previously noted.
Related: CPI to spark dollar ‘massacre’ — 5 things to know in Bitcoin this week
On the technical analysis front, Bitcoin needs to close above its weekly resistance range, which is defined by the $29,500 to $32,000 zone, to target a potential rally toward $40,000.
BTC/USD weekly price chart. Source: TradingView
This range acted as support during the periods from December 2020 to February 2021, May 2021 to July 2021, and January 2022 to March 2022.
If there is a retracement from the specified range, BTC’s price could face a significant drop toward its 50-week exponential moving average (50-week EMA; the red wave) around $25,250 and its 200-week exponential moving average (200-week EMA; the blue wave) near $25,000.
The views, thoughts, and opinions expressed here are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any decisions.
