On Wednesday, Bitcoin (BTC) saw a robust 5% surge, reclaiming the $65,000 mark. This uptick followed the release of US CPI inflation data for April, indicating a moderation in price pressures. This data bolstered expectations that the Fed may enact several interest rate cuts before 2024 draws to a close.
Bitcoin’s ascent coincided with a 0.9% leap in the S&P 500, reaching fresh all-time highs.
Meanwhile, both US bond yields and the US Dollar Index dipped to their lowest levels in a month.
According to CME data, traders are notably confident that there will be at least one interest rate cut by September, with a 71% money market implied probability indicating such a move.
Just a day ago, the money market implied a probability of at least one rate cut by September stood at approximately 65%.
Bitcoin currently confronts a significant technical obstacle marked by its 50-day moving average (50DMA) at $65,166. A breakthrough at this level, coupled with surpassing its May peaks around $65,500, could pave the way for additional short-term gains.
Should this occur, attention would turn to the late-April highs near $67,000. Subsequently, eyes would be set on retesting yearly highs around the $73,000 range.
Can the Bitcoin Price Break Out of Its Multi-Month Range?
Concerns regarding a gradual uptick in inflation during Q1 2024 have posed a significant obstacle to Bitcoin over the past few months.
The persistence of inflation at the beginning of 2024 led markets to recalibrate expectations, dialing back on aggressive Fed rate cut projections.
This adjustment likely stands as the primary factor behind Bitcoin’s stagnation following its surge to new all-time highs near $74,000 before the halving event.
Since then, it has been confined within a consolidation range, predominantly fluctuating between $60,000 and $70,000.
While the latest inflation report doesn’t represent a game-changing development in itself, it does indicate that the inflation spike observed in Q1 may not be sustained.
If inflation concerns are poised to diminish going forward, the macroeconomic landscape could shift to become a medium-term tailwind for Bitcoin, rather than a headwind.
But can Bitcoin break free from its multi-month range?
Historically, May hasn’t favored Bitcoin. Data from bitcoinmonthlyreturn.com reveals declines of 35% in 2021, 15.5% in 2022, and 7% in 2023 during this month.
According to Steno Research, Bitcoin has displayed subpar performance during the middle months of the year over the past five years.
Furthermore, post-halving rallies typically take hold 4-6 months after the halving event, suggesting any significant upward momentum might not materialize until after August.
However, 2024 could diverge from this trend due to being an election year. Markets often rally in anticipation of elections, breaking away from their usual bearish summer patterns.
Despite short-term uncertainties, long-term risks for Bitcoin appear heavily skewed to the upside. Factors such as potential rate cuts, the halving effect, sustained government expenditure, and increasing demand for spot Bitcoin ETFs could propel BTC beyond the $100,000 mark by 2024 or 2025.
