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(Kitco News) - Volatility remains the name of the game in the cryptocurrency market, as Wednesday saw the price of Bitcoin pump and dump following the latest Consumer Price Index (CPI) release, leaving the top crypto relatively unchanged on the 24-hour chart.
In the equities markets, stocks traded mixed as inflation came in slightly lower than expected, but remained well above the Federal Reserve's 2% target. At the close, the S&P and Nasdaq managed to finish in the green, up 0.43% and 1.04%, respectively, while the Dow recorded a slight loss of 0.08%.
Data provided by TradingView shows that the price of Bitcoin (BTC) briefly spiked to a high of $28,405 following the CPI data release, only to sharply reverse course in the afternoon, plunging to a daily low of $26,885 before being bid back above $27,700 where it has traded since Monday’s close.
BTC/USD Chart by TradingView
May Bitcoin futures prices “have recently fallen to test the key support line at around $27,000,” according to Kitco senior technical analyst Jim Wyckoff, who posted the following chart highlighting the range that BTC has been trading in since mid-March.
Bitcoin futures 1-day chart. Source: Kitco
“Bulls remain a bit wobbly at mid-week,” Wyckoff said. “A drop below that support line would give the bears fresh power to suggest a fresh leg down in prices in the near term. Right now, the bulls and bears are on a neutral overall near-term technical playing field.”
Delving further into the range-bound trading for BTC over the past month and a half, analysts at Eight Global said that “Bitcoin is in compression at the moment,” which they defined as “a form of price action where we are seeing a sequence of lower highs and higher lows.”
BTC/USD 1-day chart. Source: Eight Global
“A compression often leads to a very heavy move,” Eight Global said. “The reason for that is, we are building loads of liquidity on either side of the marketplace. This is due to the fact that we are not sweeping any high or low, price gets pushed away and we will still have a lot of resting orders in the order book in the form of stop losses.”
Eight Global stressed the point that in market formations like this, a breakout in either direction is equally possible, so applying “appropriate risk management” is key.
BTC/USD 1-day chart. Source: Eight Global
As it stands now, the analysts are leaning toward a breakdown in price for several reasons. “We keep rejecting the daily order block without taking out the liquidity on the downside, but over the last couple of days the price is looking rather weak,” they wrote. “From a biased standpoint, I would say that we are eventually going to move towards the lows around 26.5K which is also in line with a daily imbalance that lies underneath it.”
Altcoins trend higher
On the whole, it was a positive day for the altcoin market as a majority of tokens in the top 200 posted gains for the day, led by a 22.8% increase for TomoChain (TOMO).
Daily cryptocurrency market performance. Source: Coin360
Other notable double-digit gainers on Wednesday include a 19.02% increase for Open Campus (EDU), a 12.3% gain for Gala (GALA) and a 10.1% increase for Aragon (ANT).
The overall cryptocurrency market cap now stands at $1.145 trillion, and Bitcoin’s dominance rate is 46.9%.
