Cryptos await US CPI; Bitcoin at $27,600
There´s been little change in the cryptocurrency market. Bitcoin (BTC) has risen around 0.3% in the last 24 hours, although it has slowed its climb to $27,600. Ethereum (ETH), has soared about the same amount, although it continues to be somewhat more upbeat and is looking to regain $1,850.
"Bitcoin has been struggling at $30,000 again in recent days and another heavy decline on Monday could set up an interesting test around $27,000, an area that has been a reliable support level since late March," explained Craig Erlam, senior market analyst at Oanda. According to the expert, a break of this level could signal a correction of the incredible 2023 rally is on the cards, with $25,000 being the next major potential support level below.
What is certain is that the worst of the crisis of the memecoins seems to be over. Different data providers indicate that the congestion caused in the Bitcoin network has eased, with pending transactions dropping below 400,000 versus the more than 500,000 recorded during the worst moments. Also, transaction fees have fallen to $5 after reaching as high as $20 at the height of the crisis.
"In the wake of massive sell-offs, Bitcoin, while still risky, seems to be benefiting from both its traditional role and its emerging role as a value store during lower rates," noted Callie Cox, analyst at eToro.
On the other hand, the April reading of the U.S. Consumer Price Index (CPI) continues to weigh on market movements. The consensus expects the headline rate to remain at 5%, while the core rate will fall slightly to 5.5% from the previous 5.6%. Also, the Producer Price Index (PPI) for the same month will be released tomorrow, on Thursday, for which its year-on-year growth is expected to come in at its lowest level in two years for both the overall rate (+2.4%) and its core (+3.3%).
"If both the U.S. CPI and PPI meet analysts' expectations, we believe this will be very well received by the markets. On the other hand, if inflation proves to be more resilient than expected, the idea that the Federal Reserve (Fed) will have to continue raising interest rates will gain strength again, which will cause tensions in the bond and equity markets," stated Juan José Fernández-Figares, director of analysis at Link Securities.
For his part, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, believes that regardless of the reading, it´s important to note that "inflation expectations are falling." "This should, at some point, play in favor of slowing price pressures," he stated.
Looking ahead to today's data, Ozkardeskaya believes that a softer-than-expected CPI should "further" fuel the Fed rate cut expectations into this fall. On the other hand, a stronger-than-expected read would weigh on the US central bank's roadmap, in addition to the lack of agreement between Democrats and Republicans on raising or extending the US debt ceiling.
In the rest of the market, there is not much change either. The main altcoins have dropped around 1%, with only Ripple (XRP) and Dogecoin (DOGE) trading in positive territory.