(Kitco News)—Bitcoin (BTC) extended its post-halving rally on Tuesday morning after the latest Consumer Price Index (CPI) report showed inflation remains steady. The index rose 2.6% year over year and 0.2% month over month, both in line with forecasts.
“Core” inflation also aligned with expectations, coming in at 3.3% year over year and 0.3% month over month.
With the latest inflation readings coming in as expected, market watchers still expect the Federal Reserve to lower interest rates by another 25 basis points in December, although they are less certain than they were last month.
“The CME’s FedWatch Tool currently predicts a 62% probability of a 25 basis point cut at next month’s FOMC meeting,” noted David Morrison, Senior Market Analyst at Trade Nation. “This is down from 84% this time last month, suggesting that another cut is still in the balance.”
While CPI ticked higher from last month’s 2.4% reading, Morrison said, “Such an increase is unlikely to throw the Fed off their rate-cutting path, as long as it doesn’t prove to be a precursor to a reversal of the downward trend established over the last two years.”
“Today’s CPI report came in line with expectations at 2.6%, providing a degree of stability that market participants have been eagerly awaiting,” said Matt Mena, Crypto Research Strategist at 21Shares.
“In recent months, Bitcoin has shown sensitivity to macroeconomic indicators, especially those tied to inflation,” he noted. “Today’s as-expected CPI alleviates some of the uncertainty weighing on investors' minds, potentially opening the door for traders to push Bitcoin to new highs past its $90k resistance level.”
“Additionally, with inflation slightly rising, this inflation trend reinforces the thesis behind Bitcoin as a store-of-value, wealth-preserving, flight-to-safety asset; in turn driving more flows into Bitcoin as buyers rush in to take advantage of its fundamental properties,” Mena said.
Bitcoin bulls responded to the CPI print by rallying higher, pushing King Crypto to a new all-time high of $93,541, and looking like they will extend higher.
BTC/USD Chart by TradingView
Prior to Wednesday’s move higher, Bitcoin was consolidating in a range between $86,000 and $90,000 after rallying to a new record high in the wake of Donald Trump’s re-election.
“After a ~30% move from 70k to 90k, it’s healthy for the market to take a breather,” said Alexander Blume, CEO of Two Prime. “That being said, it seems that relentless demand from the BTC ETF side, spurred by pro-Trump policy for the industry as well as rumors of Middle Eastern countries now accumulating the asset, are driving prices higher.”
Blume noted that “Perpetual futures funding rates and premiums are quite elevated, suggesting leverage from derivatives traders is spurring the rally on,” before warning that “Futures premiums in the high teens and 20s are not sustainable for long.”
According to statistician Willy Woo, creator of Bitcoin data platform Woobull, BTC could see some more consolidation at these levels before rallying to the next major resistance level at $102,000.
“When BTC breaks into all-time-highs, there's no prior history of resistances for the market to trade around,” he said in a post on X. “This means price goes into unfettered price discovery, expect wild swings.”
“In these situations we have 2 guides to find new resistances. Fibonacci bands, using magic numbers seen in nature, and real liquidation levels of market positions,” Woo said. “88-91k was the first target. We hit it. Consolidation should happen here. This is both from local fib levels and liquidation levels where most of the shorts have been taken out, it's the end of compulsory buying from short sellers getting culled.”
“102k is the next macro fib, using last cycle high and this cycle low,” he concluded. “Let's see where new liquidations cluster around, but for now, that's our next target based on fibs.”
TradingView analyst TradingShot aligned with Woo but is even more bullish, noting that the demand for Bitcoin has surpassed the levels seen in previous cycles.
“Three months ago (August 12, see chart below), we published our view on Bitcoin (BTCUSD), claiming that on the current levels and compared to the relative stages it was in previous Cycles, the bullish trend was stronger than ever before.”
“At the time, the price was 'just' at 59K, and yesterday it touched the $90000 level,” he added. “This shouldn't surprise you as the pattern has been 'playing out' in a similar way to both the 2019 - 2021 and 2015 - 2017 Bull Cycles.”
“In fact, it is so strong that we now need to readjust the green parabolic channel of the current (2023 - 2025) Bull Cycle to a more aggressive pattern in order to fit the enormous rally that started in September.”
“As you can see, this comparison with the previous Cycles suggests that BTC can reach at least the -0.618 Fibonacci extension, which is a little over $170000, like the other two did,” TradingShot said.
“It also highlights how the current Cycle has been more aggressive than the previous one as the price reached the All-Time High faster (March 2024) than the previous two, but also the amazing symmetry among them as the current (final) parabolic rally that started on the August 05 2024 bottom took place 90 weeks (630 days) after the November 2022 bottom,” he added. “As you can see, both in 2020 and 2016, the final parabolic rally also started 90 weeks after their respective cycle bottoms.”
At the time of writing, Bitcoin trades at $93,120, an increase of 7.6% on the 24-hour chart.
