Bitcoin eases from three-month high ahead of CPI data

BTC has eased back from the 105.7k 6-month high reached yesterday, to current levels of 103k as investors weigh up US trade policies and ahead of inflation data.  

Bitcoin, along with risk assets, surged on Monday after the US and China agreed to reduce trade tariffs to levels prior to early April. The US lowered trade tariffs on Chinese goods to 30% from 145%, and China reciprocated, lowering tariffs to 10% from 125%. The agreement surpassed market expectations. It's worth noting that tariffs will still be higher than they were when Trump’s term started, which could add inflationary pressures.  

While US stocks closed higher (Nasdaq 100 +4.35%), BTC experienced heightened volatility, rising to 105.7k before falling back to 100k in profit taking and then recovering to 103k. These swings resulted in a wave of liquidations in the cryptocurrency market. Over the past 24 hours, $608 million positions were liquidated, 80% of which were long positions. 

US CPI data 

A portion of the selling that was seen in BTC could be associated with profit taking around the 105k wall and de-risking ahead of the US CPI inflation print today. CPI is expected to confirm that inflation remained unchanged at 2.4% YoY in April, in line with March. Core CPI is expected to ease to 2.8% from 3%. Cooler inflation could signal easing inflationary pressures, which could potentially lead to more accommodative monetary policy, lifting BTC. 

Furthermore, with BTC ETF demand remaining strong amid 4-straight weeks of net inflows, corporate demand also increasing, and regulatory news supportive, the outlook for BTC remains bullish. 

Still no extreme Greed 

The crypto Fear and Greed Index is at 70 in the Greed territory, up from 59 (Greed) last week and 45 (Fear) last month. Interestingly, despite BTC approaching its record high, investors have not become extremely greedy. This could also play in BTC’s favour, suggesting that hype hasn’t yet developed, meaning BTC’s price potentially has more room to run. 

Bitcoin technical analysis 

BTC continues to trade within an ascending channel dating back to early April, running into resistance at 105.7k before correcting lower to 103k. This move lower has brought the RSI out of overbought territory.  

Buyers will look to extend the bullish run, rising above 105.7k to create a higher high towards 109.5k and fresh higher highs. 

Support is seen at 100k, the psychological level. A break below here opens the door to 97k, the previous resistance turned support. 

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