Bitcoin (BTC) continues to tread water near support at $52,000 in early training on Friday after the latest Producer Price Index (PPI) report, a key gauge of wholesale inflation, increased by 0.3% in January from the month prior, higher than the 0.1% rise expected by economists.
This is the second inflation reading to come in hotter than expected this week following Tuesday’s Consumer Price Index (CPI) report, putting investors on edge as they only add to the reasons why the Federal Reserve won’t be lowering interest rates in March, while expectations for a May rate cut have dwindled to 30%.
A March interest rate cut is likely completely ruled out after this data.
Furthermore, a May rate cut has become questionable as well.
The Fed knows that the fight against inflation is still far from over.
Follow us @KobeissiLetter for real time analysis as this develops.— The Kobeissi Letter (@KobeissiLetter) February 16, 2024
Data provided by TradingView shows that Bitcoin briefly dipped to $51,625 when the PPI was released, but recovered back above $52,000 shortly afterward, where it trades at the time of writing, a decrease of 0.4% on the 24-hour chart.
BTC/USD Chart by TradingView
According to analysts at Ryze Labs, “This week, Bitcoin's aggregate futures open interest soared to an all-time high of approximately $23 billion, a level last observed when BTC prices peaked in November 2021.”
“Concurrently, the crypto fear and greed index reached a notable high of 79, suggesting a tilt in social sentiment towards market exuberance,” they added. “Signs of retail euphoria and complacency are evident, with many predicting new all-time highs and reports of overvalued VC/private funding rounds.”
Crypto Fear and Greed Index is at the Highest Level Since Bitcoin’s ATH in 2021. $BTC #Sentiment pic.twitter.com/rUtjxOiWU7
— Moonward Capital (@moonwardcapital) February 13, 2024
“Nonetheless, when considering the broader context of global liquidity reaching new peaks at $171.7 trillion, driven largely by the Federal Reserve and the People's Bank of China, along with the unprecedented traditional finance (TradFi) influx via Bitcoin ETFs, moderate funding rates, and the upcoming Bitcoin halving in less than 90 days, our long-term bullish outlook remains firm,” Ryze Labs said. “We also anticipate potential quantitative easing or interest rate cuts later this year. As part of our ongoing strategy, we will closely monitor futures funding levels to guard against excessive risk-taking.”
While many analysts see the Bitcoin rally extending higher as the halving approaches, crypto market analyst Justin Bennett warned that the possibility of a downside move remains a concern as long as Bitcoin trades below $53,000.
$BTC remains vulnerable while below this $52,000 - $53,800 area.
If I'm wrong, then #Bitcoin should clear this area and base above it.
Until then, I'll remain bearish.
No emotion needed. pic.twitter.com/2EETsEICFr— Justin Bennett (@JustinBennettFX) February 16, 2024
