The Bitcoin yesterday continued its rally to reach highs of $ 26,434, its highest level since June 13, 2022, as the publication of the US CPI offers more support to Bitcoin, as it had reacted positively to the US banking crisis since Sunday.
At the time of writing, the pair BTC/USD It has moderated its rise, and stands at around $ 24,900, still accumulating a rise of 2% in 24 hours and more than 12% in a week, maintaining a positive direction on the chart.
Bitcoin Records New Annual Highs Following US CPI
Bitcoin’s highs on Tuesday follow the release of February’s consumer price index (CPI), which showed inflation falling to 6% from 6.4% in January.
Core inflation, excluding food and energy costs, rose 0.5% from January, against expectations of 0.4%, although the year-on-year core inflation rate fell slightly from the previous month.
Bitcoin had already risen strongly since Sunday, following the decision by US banking and financial regulators to protect depositors at collapsed Silicon Valley Bank (SIVB) and Signature Bank (SBNY).
This unexpected banking collapse has had a profound impact on market expectations about Fed rates, and investors now believe a 50 basis point hike is out of the question, according to the Fed’s rate barometer Investing.com.
The most likely scenario now is a rate hike limited to 25 basis points, but many leading analysts like those at Goldman Sachs (NYSE:GS), anticipate a strong risk of pause. Some, like Nomura economists, go even further, estimating that the Fed could cut rates as early as next week.
The potential of cryptocurrencies as an alternative to finance increases due to the US banking crisis
Bitcoin has benefited from the prospect of the Fed ending the rate hike earlier than expected. However, some market watchers have also argued that the current U.S. banking crisis highlights the failures of the traditional financial system.
Bitcoin was created in the wake of the 2008 financial crisis, in response to the flaws and perversions of traditional finance. Therefore, seeing the financial system in trouble again highlights the original raison d’être of Bitcoin and other cryptocurrencies.
Note that Bitcoin has corrected its course since peaking on Tuesday, moving towards the $25,000 mark at the time of writing, a decline that can easily be attributed to profit-taking.
What to watch in Bitcoin this Wednesday
In addition, the news that a Russian fighter collided with a US Air Force drone over the Black Sea on Tuesday has caused a general decrease in interest in the risk that has weighed down cryptocurrencies. We will therefore continue to monitor developments on this matter today.
Other U.S. economic data is also expected, such as the February producer price index.
Technical thresholds to watch in Bitcoin
From a graphical point of view, we observe that the area around $ 25,000 remains a major immediate obstacle for Bitcoin, after which the cryptocurrency should quickly reconquer yesterday’s highs.
In case of correction, the $24,000 level will be the first potential support level, before $23,000, where the 50-day moving average currently stands. Below this level, the profile of the BTC/USD pair would again be more bearish.