Bitcoin Breaches Key Resistance After Soft US CPI Inflation

  • BTCUSD
    (${instrument.percentChange}%)

BTC/USD Analysis

Yesterday's inflation report form the US showed that the Consumer price index decelerated to +7.1% in November and the lowest level of the year, ahead of today's rate decision by the Federal Reserve. The recent moderation in inflationary pressures supports the bank's intention to slow the aggressive pace of tightening, creating some optimism for a faster and lower peak in rates.

CME's FedWatch Tool prices-in a downshift with a 50 basis points increase today, while expectations around the terminal rate eased after the CPI report [1]. The Fed had previously projected the median rate to peak at 4.6%, but Chair Powell recently said that it will likely be higher than that. [2]

As such, we will be anticipating today's updated projections and the dot-plot, other than the rate decision itself and the rhetoric of the policy statement and Mr Powell's press conference. The outcome of this meeting can spark volatility and determine the trajectory of Bitcoin against the greenback.

BTC/USD reacted positively to the downside surprise in Inflation, extending its recovery from November's two-year lows. It took out the key resistance provided by the EMA200 and the 38.2% Fibonacci of last month's high/low plunge. This allows it to push for the 50% Fibonacci (18,384-18,430), but will need help from the incoming events to extend its advance past this level and bring 19,931-20,000 in the spotlight.

On the other hand, BTC/USD has not strayed far from the aforementioned key resistances and eases today, as the Relative Strength Index reached the most overbought levels in three months. This creates scope for a pullback, but a catalyst will be required for fresh monthly lows (16,680), whereas those of the year appear distant at this stage (15,455).

Furthermore, fears around the state of the crypto industry remain in the spotlight, after the collapse of FTX. The US Justice Department indicted its founder and former CEO Samuel Bankman-Fried, for fraud, money laundering and campaign finance offenses. [3]

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 14 Dec 2022 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

2

Retrieved 14 Dec 2022 https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm

3

Retrieved 01 Dec 2023 https://www.justice.gov/opa/pr/ftx-founder-indicted-fraud-money-laundering-and-campaign-finance-offenses

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.