(Kitco News) – Bitcoin’s (BTC) price crested above $58,000 in early trading on Thursday as the August Producer Price Index (PPI) report showed inflation continued to moderate towards the Fed’s 2% goal.
The Labor Department reported that the PPI, which tracks inflation before it reaches consumers, rose 0.2% from July to August, while the year-over-year increase was 1.7%, the smallest such rise since February and down from a 2.1% annual increase in July.
The report further solidified expectations for a rate cut at next week’s Federal Open Market Committee meeting, though the odds of a 50 bps cut have fallen to 13%, down from 40% last week.
“The odds now favor a total of 100 basis points worth of cuts between now and the year-end, with 125 basis points now less likely,” noted David Morrison, senior market analyst at Trade Nation. “Amid all the rate cut talk, it’s worth remembering that the Federal Reserve continues to run down its balance sheet, and thereby quietly tightens monetary policy. Could the Fed announce that this policy will now cease, seeing as it runs in opposition to rate cuts?”
Jobs data also showed that initial jobless claims climbed to 230,000 last week, an increase of 2,000 from the prior weekly period and above economist's expectations.
Data provided by TradingView shows that Bitcoin spiked to $58,587 after the PPI was released but has since fallen back below $58,000 as traders who bought in during the recent sub-$53,000 dip took profits.
BTC/USD Chart by TradingView
According to market analyst Kevin Svenson, the correction and sideways price action that Bitcoin has experienced since late February is not unusual, as it has happened during every bull cycle.
“People may just be heavily overexposed to the market, having grand expectations to be set for life after this bull run,” he said in a YouTube update. “And because everyone is so overexposed, all the hardcore crypto people every time there’s a dip, there’s a big concern even though in past cycles, 40% dips that happened multiple times in 2017 on the way from $200 to $20,000.”
Technically speaking, Svenson said the daily chart shows that Bitcoin is forming a descending broadening wedge, an indicator that is typically considered bullish. Based on the current setup, he said BTC could rally 63% from the current level if the descending broadening wedge pattern plays out how he expects.
“The descending broadening wedge… well, it’s still here. It’s still in play, nothing has changed…
if we do have that recovery taking place moving forward, the target is also going to be based on the descending broadening wedge,” he said. “There are multiple ways to get a target for a descending broadening wedge measuring from the top to the bottom of the pattern and also measuring from the widest point of the wedge and getting your target that way.”
“Now from the highest point to the lowest point of the wedge… …the target becomes something like $92,000 roughly,” Svenson said. “From the widest point of the wedge so far, that target comes in at about $89,000. So anywhere from $89,000 to $92,000 is the collective target, you know, using both of these methods.”
Market analyst Jelle aligned with Svenson’s analysis and said Bitcoin will “be at $90,000 before you know it.”
#Bitcoin still trades inside this descending broadening wedge.
Break above $65,000 and we'll be at $90,000 before you know it.
Q4 should be glorious. pic.twitter.com/c3DB8EWZRk— Jelle (@CryptoJelleNL) September 12, 2024
At the time of writing, Bitcoin trades at $57,842, an increase of 3% on the 24-hour chart.
