Bitcoin crosses $30K Resistance
4/14/23
By:
Erin Brewer
Is This a Bull Trap or New Bull Cycle?
On April 12, the U.S. Consumer Price Index (CPI) data was released, showing that the official inflation rate for March increased by 5% year on year. While slightly lower than the consensus of 5.1%, it still remains significantly higher than the U.S. Federal Reserve's 2% target, despite being the lowest reading since May 2021. However, the data suggests that inflation is no longer driving Bitcoin's rally, and investors' attention has shifted to potential recession risks following the banking crisis.
Several warning signs of a macroeconomic downturn have emerged, including the recent bankruptcy of Silicon Valley Bank and the government-backed sale of Credit Suisse to UBS. The most recent ISM Purchasing Managers Index data fell to its lowest level since May 2020, indicating an economic contraction. Federal Reserve documents released on April 12 suggest that the aftermath of the U.S. banking crisis is likely to lead to a "mild recession" later this year. While some speculate that the Fed will hold off on raising interest rates due to the crisis, officials have affirmed that more effort is needed to keep inflation under control.
Commercial real estate prices fell 1.6% in February, the most since the 2008 financial crisis, according to a Moody's Analytics report. Additionally, the national office vacancy rate reached 16.5%, highlighting the severity of economic difficulties faced by businesses. Despite these challenges, Bitcoin has rallied by 50% between March 11 and April 11, demonstrating resilience to fear, uncertainty, and doubt (FUD).
While some traders have placed bearish bets using Bitcoin options, with an open interest for BTC options expiry of $950 million on April 14, including $490 million in call (buy) options and $460 million in put (sell) options, bears have been caught off guard, with less than 7% of their bets exceeding $29,000. Despite concerns about potential recession risks and inflation, Bitcoin's positive momentum appears to be continuing.
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