Bitcoin (BTC) reacted well to mixed US CPI data on Wednesday, and a surge to over $100,000 was the result. However, the surge appears to have run out of steam and another rejection is starting to take place. A higher low is the next target for bulls.
Market surges on US CPI data
Bitcoin’s reaction to the release of the December US inflation figures was certainly positive, as the king of the cryptocurrencies surged $4,000 to end the day above $100,000. The data was mixed, given that year-on-year CPI consumer inflation accelerated from 2.7% to 2.9%. However, core inflation dropped slightly from 3.3% to 3.2%. As a result, a cut in interest rates for the end of the month is unlikely.
It wasn’t just Bitcoin that was buffeted by this macro gust of wind. The S&P 500, which had looked as though it was about to drop out of an ascending channel it has been following since mid-2023, rocketed up from the bottom and put on 3% for the day.
Big buy from U.S. Spot ETFs on Wednesday
One of the bigger buys from the U.S. Spot Bitcoin ETFs was fuel to the fire on Wednesday. A total of 7.82K BTC was purchased across the 10 ETFs, with Fidelity’s FBTC fund easily taking the lion’s share with a 4.80K purchase.
$BTC rejection
Source: TradingView
As can be seen on the daily time frame, $BTC reached the descending trendline of the triangle and was not able to break through. A rejection is currently taking place, and the price is sitting atop what could become reasonable support at $99,000. This probably won’t hold for long, and a deeper descent is more likely to occur.
Nevertheless, things are starting to look more rosy for the Bitcoin price. If $BTC can avoid making a lower low, which would take it down past the $89,300 candle wick on Monday, the chances of an inverted head and shoulders comes into play. The left shoulder formed by the low made on 30 December, the head as Monday’s wick down, and the right shoulder perhaps coming down as low as the 90K region. If this happened, it could provide the momentum needed to break through the triangle and head back to the $108,000 high.
Bollinger Bands remain positive for $BTC price
Source: TradingView
The Bollinger Bands are one of the major tools of the professional investor/trader. The bands expand or contract based on market volatility. The wider they expand, the greater the volatility, and vice versa. When the price touches or exceeds the upper or lower bands, it is considered over, or undersold.
In the weekly chart above, it can be seen that the jaws are wide open, which signifies rising prices. This is likely to continue until the red top band starts to bend down, signalling a period of falling prices. On the weekly chart, this signal is quite reliable, as can be seen in the previous turndowns of the red band, and the signalled downtrend will usually be very significant. That said, the Bollinger Bands, as with most other price indicators, are lagging. Meaning that the price is likely to drop before the band does so.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.