By Bitcoin and other cryptocurrencies experienced a slight dip on Thursday, remaining within the range that has been dominating the market for weeks. However, there are indications that this may be a prelude to more gains in the future.
Over the past 24 hours, the price of Bitcoin has seen a minimal drop of less than 1%, reaching $30,500. Following Wednesday’s release of the consumer-price index for June, which indicated a cooling in U.S. inflation, the largest digital asset briefly spiked near $31,000. Despite this, Bitcoin has retreated and is still unable to reach April’s peak of around $31,500. However, it should be noted that the psychologically significant $30,000 level remains secure.
According to Craig Erlam, an analyst at broker Oanda, Bitcoin’s price was quite volatile during the inflation release but ultimately had little lasting impact. He also mentioned that Bitcoin continues to trade within the $30,000-$31,000 range it has mostly occupied in recent weeks. While this consolidation may bring comfort to cryptocurrency enthusiasts, it is still uncertain which direction Bitcoin will break out in.
Notably, Bitcoin’s value rose concurrently with the Dow Jones Industrial Average and S&P 500 following the inflation data release. This suggests that the Federal Reserve may not need to increase interest rates significantly and could potentially begin cutting rates early next year. The substantial rise in rates since March 2022, amid the highest inflation in many years, has placed significant pressure on both stocks and cryptocurrencies. Therefore, a more accommodative Fed stance would serve as a positive factor for these markets moving forward.
Bitcoin Consolidating Below Mid-Point, a Positive Sign for Bulls
The recent release of the CPI has not sparked the desired impact for crypto bulls, as the market remains rangebound. However, there is a silver lining in the price action of Bitcoin, suggesting that a bullish surge is on the horizon.
According to analysts at the crypto market intelligence firm Glassnode, Bitcoin is currently in a consolidation phase below its mid-point of $30,000 for the 2021-22 cycle. Several metrics have reached a state of equilibrium and balance, resembling previous re-accumulation periods observed in past cycles. These periods are characterized by months of minimal macro direction and serve as a precursor to the anticipated bull run.
During these re-accumulation phases, Bitcoin trades sideways and experiences volatility for an extended period. Glassnode explains that we are now back at this equilibrium point, and it remains to be seen whether overcoming it will require a similarly lengthy and choppy process.
Other cryptocurrencies have displayed varied performance in comparison to Bitcoin. Ether, the second-largest crypto, saw a marginal loss of less than 1%, settling at $1,875. Smaller altcoins, such as Cardano and Polygon, weakened further with losses of 2% and 1% respectively. Meanwhile, memecoins like Dogecoin and Shiba Inu remained relatively stable, shedding less than 1% each.
In conclusion, while the CPI release faltered to provide the desired market momentum, the consolidation of Bitcoin below its mid-point signals optimism for the crypto bulls. The upcoming period could resemble previous re-accumulation phases, paving the way for a potential bullish surge.
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