For the price of Bitcoin, the course for the rest of January may have been set today. The question was: will Bitcoin continue its mini bull run or will there be a correction? This was decided by today’s US Consumer Price Index (CPI) release at 8:30am EST.
The baseline was relatively clear. Most estimates agreed that 6.5% is the magic line that will decide whether the market is bullish or bearish in the short term. If the number is 6.3% or below, there will be an uptrend as the US central bank’s latest FOMC projections are no longer credible and will be thrown overboard.
At 6.3% to 6.5%, the market is likely to celebrate in moderation, although this may already be priced in. At 6.5% to 7.1%, there will be a selloff.
And the estimates were spot on. The CPI reached 6.5%
JP Morgan had released its own game plan calling for a 65% probability that the CPI would be between 6.4% and 6.6%, which could trigger a 1.5% to 2% move higher. in the S&P 500, according to the banking giant.
The two least likely scenarios, according to JP Morgan, are that the CPI falls below 6.4% (20% probability), which could mean a 3-3.5% rise for the S&P 500. worst case, the CPI is above 6.6% (1.5%), which could mean a 2.5% to 3.5% drop for the S&P 500, according to JP Morgan.
The CPI consensus for this week’s release is 6.5% year-on-year.
Here’s JP Morgan’s game plan… pic.twitter.com/U6qb2rDUlP
— Ayesha Tariq, CFA (@AyeshaTariq) January 11, 2023
With Bitcoin trading at a higher beta, today’s CPI print should result in an even more volatile crypto market. It should also be noted that the BTC price has already seen a sharp rise in the lead up to the launch; this makes the market even more sensitive to the CPI figure.
Even if the value is below the previous month by 7.1%, a significant fall will be necessary to meet the high expectations of the market.
Bitcoin Price: Levels to Watch Today
A look at the 1-hour chart reveals that Bitcoin investors were ahead of the release of the supposedly positive CPI data. In the last 24 hours, the BTC price is up 4.2% and was at $18,196 at press time.
With that, the Bitcoin price is facing upside resistance at $18,238. If the data is favourable, it should be an easy task for Bitcoin to break through this resistance. If the CPI is above 6.5%, the bulls will first have to defend the support at $17,609. However, the even more important support level for Bitcoin is at $17,322.
A look at the 1-day chart reveals a similar picture. On the upside, the range between $18,238 and $18,382 is likely to be crucial in determining whether Bitcoin price will soon trade above $19,000 again, which is roughly where you expect the next key resistance zone.
