Bitcoin continues trading sideways, will BTC break out of limbo with US PPI data release?


  • Bitcoin price has been largely unaffected by concerns plaguing the traditional market with US PPI release. 
  • Bitcoin could witness a spike in volatility and move towards the boundaries of the current consolidation phase. 
  • The price outlook of Bitcoin is currently bearish and a move below $16,900 could validate the thesis.

US Producer Price Index (PPI) for final demand moved up 7.4% on an unadjusted basis. The upside surprise implies inflation is elevated and cryptocurrencies are expected to slide lower. Traders could pull out of risk assets like Bitcoin as the US Federal Reserve moves ahead with a continued rate hike. Bitcoin price is currently in an uptrend on the daily chart, but for bulls to realize their advantage, BTC needs higher volatility

Previously, the US Consumer Price Index (CPI) data release has acted as a trigger for large swings in Bitcoin price. The next release is scheduled for December 13. The largest asset by market capitalization could therefore break out of its limbo and sideways price action close to the release date. 

Also read: SEC order attempts to assess health of crypto industry after FTX exchange fallout

Bitcoin price could nosedive with US PPI data release

Bitcoin traders brace for impact as US PPI data is released. The Producer Price Index measures the average change over time in the selling prices that domestic producers receive for their output. 

With a higher than projected increase in PPI, it is conclusive that inflation is here to stay and risk assets like Bitcoin could suffer a downside from bearish sentiment among traders. In November, most of the increase in the index for final demand is attributable to a 0.4% advance

in prices for final demand services. Prices for final demand less food, energy, and trade services moved up 0.3% in November after rising 0.2% in October. 

US PPI data one-month and twelve-month percent changes

US PPI data one-month and twelve-month percent changes

The Consumer Price Index (CPI) measures the change in the prices of goods and services contained in a basket of consumer items. The US Federal Reserve, the country’s central bank, pays very close attention to this figure as it plays a key role in maintaining price stability.

CPI data influences sentiment amongst traders in traditional stock markets, and the same is true for risk assets like Bitcoin and cryptocurrencies. Historically, in the days leading up to the release of CPI data there is a spike in trade volume and Bitcoin price yields gains. An increase in inflation wipes out gains in the days following the announcement, and trade volume declines until another catalyst gives bulls the advantage. 

An increase in the price of consumer goods and services results in capital outflow from risk assets like Bitcoin and increases the selling pressure on BTC, coupled with large price swings. Bitcoin is currently trading sideways with the CPI data release a week away. 

Jim Wyckoff, Senior technical analyst at Kitco notes that,

Prices are now pausing but are still in a fledgling uptrend on the daily bar chart. Bulls have a very slight near-term technical advantage but need to show fresh power soon to keep it.

Expert opinion on US CPI expectation

Clifford Bennett, chief economist at ACY Securities believes that the US Federal Reserve could slow the pace at which it raises interest rates with a moderate CPI print. This would have the effect of weakening the US Dollar, which in turn would have a positive effect on the prices of assets and commodities priced in US Dollars, such as Bitcoin and other cryptocurrencies. 

US CPI data released on November 10, 2022

US CPI data released on November 10, 2022

Michael Hewson, Chief Market Analyst at CMC markets argues that given Federal Reserve Chairman Jerome Powell’s comments at the Brookings Institute last week, the pace of interest rate hikes is likely to slow down from 75 to 50 bps per meeting. 

Traders will also get an insight into consumer inflation expectations with the latest December University of Michigan inflation expectations numbers for 1 year and 5-10 year, scheduled to be released at 18:30 GMT later on Friday, November 9, with the previous forecasts at 4.9% and 3% respectively. 

What to expect from Bitcoin price

A deep dive in Bitcoin price trend reveals that the asset is currently trading between the $16,000 and $17,500 level. After a successful retest of the $17,100 level, bulls gained an advantage and pushed BTC to $17,260. 

If Bitcoin price extends its gains, it could target the resistance at the 50-day Exponential Moving Average (EMA) at $17,744 level. A decline below $16,600 could send BTC to the range low of $16,000 and invalidate the bullish thesis. 

BTC/USDT price chart

BTC/USDT price chart

With fast spreading FTX contagion and crypto firms filing for bankruptcy, the key price levels to watch out for are between $18,000 to $19,700 and $16,000 to $17,500. Bitcoin price could nosedive to the range low of $15,900 based on the PPI data release. BTC needs buyers to line up for bulls to gain an advantage and push Bitcoin higher ahead of CPI data release. 

Once CPI data is out, Bitcoin price could witness large swings and finalize the boundaries of consolidation from the above mentioned price levels. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Ripple's XRP breaks out of downtrend as RLUSD receives greenlight from New York regulators

Ripple's XRP breaks out of downtrend as RLUSD receives greenlight from New York regulators

Ripple's CEO Brad Garlinghouse announced on Tuesday that the company received a green light from the New York Department of Financial Services on the launch of its stablecoin RLUSD. 

More Ripple News
Could Google's supercomputer crack Bitcoin? Crypto community maintains positive outlook

Could Google's supercomputer crack Bitcoin? Crypto community maintains positive outlook

Bitcoin faced mixed sentiments on Tuesday after crypto community members spoke on the potential of Google's new quantum chip Willow's ability to crack blockchain networks and render the security of public key cryptography useless.

More Bitcoin News
Crypto Today: Microsoft Rejects Bitcoin Reserve Plan, as Cardano, XRP Lead Market Rebound

Crypto Today: Microsoft Rejects Bitcoin Reserve Plan, as Cardano, XRP Lead Market Rebound

Amid an escalating geopolitical crisis, the global crypto market crash on Monday saw over $1.5 billion worth of liquidations, triggering double-digit losses across top-ranked digital assets.

More Cryptocurrencies News
Litecoin Price Prediction: LTC to hold $100 support as traders deploy $10M of leverage

Litecoin Price Prediction: LTC to hold $100 support as traders deploy $10M of leverage

Litecoin price broke below the $110 level on Tuesday, down 20% in a frenetic 24 hours as rising geopolitical risks triggered volatility across global crypto markets.

More Litecoin News
Bitcoin: Long-awaited $100K milestone meets profit taking

Bitcoin: Long-awaited $100K milestone meets profit taking

Bitcoin ends the working week hovering around $98,000 after a very volatile Thursday when it surpassed the $100K milestone and underwent a sharp correction. Strong institutional demand, whale accumulation, and the choice of a pro-crypto figure to lead the US SEC fueled the rally this week. 

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP