The publication of inflation data is approaching! Uncertain future for Bitcoin?

Bitcoin is approaching a crucial moment this week, on the eve of the highly anticipated release of US inflation data this Tuesday, February 12, 2024. The Consumer Price Index (CPI) figures for January will set the tone for Bitcoin’s price trajectory in the coming weeks and could lead to significant volatility in the crypto markets.

Market Expectations and Key Levels to Watch  

Currently, Bitcoin is hovering around $49,000, after a series of seven consecutive gains through last Sunday. However, the price is struggling with resistance around $48,500, a level where about 800,000 addresses hold approximately 270,000 BTC, with an average purchase price of $48,491.

Expectations are high ahead of Tuesday’s release of US inflation data. The consensus is betting on inflation slowing down to 2.9% in January, compared to 3.4% in December, as well as core inflation at 3.7%, after 3.9% the previous month. Any upward surprise would be a hawkish signal and could lead to a stronger dollar.

As Bitcoin is very sensitive to CPI figures, which reflect the erosion of purchasing power, this report will be closely monitored. If inflation decelerates less than expected, the FED might postpone a rate cut, which would weigh on Bitcoin. Conversely, lower inflation would encourage a monetary easing favorable for cryptos.  

Short and Medium-Term Outlook for Bitcoin Price 

In the short term, the main directional catalyst will be tomorrow’s CPI release. A marked slowdown in inflation should allow Bitcoin to break the $48,500 resistance and accelerate towards $50,000. Conversely, an inflationary surprise would likely cause a drop towards the $45,000 support level.

In the medium term, the trend appears constructive for Bitcoin, supported by positive structural factors. Adoption continues to grow, as evidenced by the record flows into ETFs in recent weeks. Moreover, mining remains profitable despite the drop in market prices, which promotes long-term accumulation and secure storage of Bitcoin. 

Some analysts believe that the bearish cycle is probably over and that a sustainable recovery is on the horizon. They cite the extreme overselling of recent months, as well as the approach of the 2024 halving, which is traditionally bullish for Bitcoin. A target of $70,000 by the end of the year, representing a 50% increase from current levels, seems reasonable to them.