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(Kitco News) - The cryptocurrency market saw a slight pullback in prices Wednesday as the latest Consumer Price Index (CPI) data came in lower than expected, with monthly inflation rising by 0.1% while the CPI was up 5% year-over-year.
U.S. equities initially saw a boost in prices following the latest inflation numbers, but the momentum soon faded as investors realized that core inflation remains well above the Fed’s target of 2%, which means that additional interest rate hikes may still be required. At the close of markets, the S&P, Dow and Nasdaq were all in the red, down 0.41%, 0.11%, and 0.85%, respectively.
Data provided by TradingView shows that the CPI data also led to a volatile trading day for Bitcoin (BTC), with its price surging to a high of $30,706 near midday, only to crash to a low of $29,840 several hours later before ultimately climbing back above support at $30,000.
BTC/USD 4-hour chart. Source: TradingView
The early morning drawdown in BTC led to April Bitcoin futures prices trading “a bit weaker,” according to Kitco senior technical analyst Jim Wyckoff, who attributed the pullback to “routine profit taking after hitting a contract high Tuesday.”
“The market this week has seen a bullish upside ‘breakout’ from the sideways trading range at higher levels, to restart a price uptrend,” Wyckoff said. “BC bulls have the solid overall near-term technical advantage and have the power to suggest still more upside in the near term.”
Leading up to the CPI release, analysts from Eight Global noted that “Bitcoin remains relatively strong, but the altcoins are bleeding heavily.” A good visual representation of this fact can be found on the Bitcoin Dominance chart, which has been rising since November and just hit its highest level since May 2022.
Bitcoin Dominance 3-day chart. Source: Eight Global
“We are seeing that the chart is in a high timeframe range and it is trying to break out of that range,” wrote Eight Global. “If we are able to get a bullish continuation once we have a retest of the range high we can see a continuation in the strength of BTC. If we deviate above range high and creep back into the range, altcoins could get some momentum and opportunities to shine.”
Scott Melker, host of The Wolf of All Streets podcast, holds the view that the latter is more likely to come to fruition, with altcoins trending higher and Bitcoin dominance dropping “unless we see a MAJOR breakout and Bitcoin crushes everything.”
$BTC Dominance
— The Wolf Of All Streets (@scottmelker) April 12, 2023
Clear case to be made now for altcoins to outperform.
While charting an asset that is not traded is a meme, it gives clues. Dominance has been in this range for years - when RSI hits overbought and it hits the top, dominance drops and alts outperform. The… pic.twitter.com/bsDeIajszI
Switching over to BTC price analysis, Eight Global noticed that the 4-hour chart “shows us a pretty clear view on what the next [move] should be, with the information that we have right now.”
BTC/USD 4-hour chart. Source: TradingView
“We had a sweep of the high and we are seeing some weakness on the lower timeframe, but the higher timeframe shows us that we have nothing to worry about for now,” they said. “Actually, a correction would be healthy for the overall price action. The main area where you can get interested in longs is the green shaded area at $28.4-28.8K.”
Altcoins enter into correction territory
The broader altcoin market pulled back into correction territory on Wednesday as profit-taking and waning momentum led to slight declines for the majority of tokens in the top 200.
Daily cryptocurrency market performance. Source: Coin360
Multichain (MULTI) was the one double-digit gainer for the day, increasing by 10.1% to trade at $10.85, while Helium (HNT) price increased by 7.21% and Terra (LUNA) gained 6.64%.
The overall cryptocurrency market cap now stands at $1.23 trillion, and Bitcoin’s dominance rate is 47.2%.
