November CPI data sparks a rally in the crypto market, pushing BTC above $17,700
(Kitco News) - The wider crypto market enjoyed a boost in token prices on Tuesday after the latest Consumer Price Index (CPI) reading came in at 7.1%, hinting that inflation continues to moderate in the face of rising interest rates by the Fed and other central banks.
The CPI news sparked a rally across traditional markets, but the momentum faded as the day progressed. Reality set in that while inflation may be moderating, it is still more than three-times higher than the Federal Reserve's long-term target of 2%.
At the close of markets in the U.S., the S&P, Dow and Nasdaq all finished in the green, up 0.73%, 0.30%, and 1.01%, respectively.
Data from TradingView shows that Bitcoin (BTC) bulls used the positive CPI news to push its price higher, hitting a daily high of $18,200 during the morning session before pulling back to support near $17,760, where it traded for the remainder of the day.
BTC/USD 4-hour chart. Source: TradingView
The move higher pushed the top crypto to a four-week high, according to Kitco senior technical analyst Jim Wyckoff, who added that “Bulls have gained the near-term technical advantage.”
“Today’s price action has produced what looks to be the beginning of a bullish upside “breakout” from the choppy and sideways trading range on the daily bar chart, to suggest a price uptrend will develop,” Wyckoff concluded.
Prepare for more volatility tomorrow
Prior to the CPI announcement, analysts at Arcane Research warned that “this week could be volatile due to several important economic events.” After the CPI was revealed, sending asset prices higher, they subsequently warned that “Tomorrow’s FOMC will likely cause a sharper market reaction.”
“In addition to the nearest hike, clues provided by Jerome Powell regarding the forecasted hiking schedule for 2023 will likely contribute to causing a volatile environment,” the analysts said. “Also, the BoE and ECB will hike interest rates this week, which may have spill-over effects on bitcoin as it may directly impact dollar strength.”
Insight into what the price action for Bitcoin may look like moving forward – if the actions from the Federal Reserve align with investors' expectations – was provided by Eight Global founder Michaël van de Poppe, who posted the following tweet highlighting the overhead resistance levels at $17,800 and $18,200.
The playing field is relatively simple for #Bitcoin.— Michaël van de Poppe (@CryptoMichNL) December 13, 2022
We want to break the resistance at $17.8K here.
If that breaks, it will probably test around $18.2K taking place.
Support levels for potential longs; $17.1K and $17.4K. pic.twitter.com/RrS1affIvN
Caution is still warranted, however, as multiple experienced crypto traders posted warnings that more downside was still a possibility, including the well-known crypto analyst il Capo of Crypto.
Remember:— il Capo Of Crypto (@CryptoCapo_) December 13, 2022
Trend is still bearish. Indicators are pointing to full capitulation event. Bad news should come soon.$BTC 12k$ETH 600-650#Altcoins 50-70% potential drop (shitcoins even more)
Stay safe, things could get very ugly.
Altcoins trend higher
Following the early morning CPI announcement, the majority of altcoins trended higher on the day as investors regained their appetite for risk and reentered the market.
Daily cryptocurrency market performance. Source: Coin360
The most notable gainers on the day include a 19.16% increase for Siacoin (SC), a 12.25% gain for MXC (MXC), and a 12.04% increase for Toncoin (TON).
The overall cryptocurrency market cap now stands at $867 billion, and Bitcoin’s dominance rate is 39.3%.