In response to fresh consumer price index (CPI) data, Bitcoin once more found it difficult to surpass its major resistance level, coiling back to its starting position after almost passing the $31,000 threshold.
According to co-founder of Glassnode Yann Allemann, meticulous placement of buy and sell barriers intended to reduce volatility was what caused the cryptocurrency’s rapid surge and subsequent decline. The lacklustre response of Bitcoin to the CPI report shows that the economic indicators may already be included into its price.
Just before the publication of the CPI data, the Bollinger Bands, a technique used by traders to indicate times of high and low market volatility, tightened to their lowest level since January. This tightening sparked a sudden increase in the price of bitcoin. This increase in price was short-lived, though, since buy and sell barriers that had been erected in preparation of volatility had effectively muted the anticipated price swings.
Allemann observes that despite these developments, Bitcoin’s open interest is still modest and shows no indication of positioning before the release of the CPI statistics.
The cryptocurrency market appears to be waiting for new capital to enter, potentially indicating a slowdown in the upward price velocity of Bitcoin.
It’s interesting to think that the macroeconomic climate may be working in Bitcoin’s favour. With core CPI inflation at 4.8% and annual CPI inflation for June coming in at 3%, both somewhat below the market expectation of 3.1%, the Federal Reserve may change its position on monetary policy to one that is more dovish.
This change, together with the US dollar index (DXY) hitting a two-month low of 101.16, may lessen the strain on Bitcoin and provide it with the breathing room it needs to move higher.
