Analysts say Bitcoin’s range-bound trading at a key support level reflects a trend reversal
Bitcoin (BTC) and cryptocurrency holders are enjoying the fruits of their labor on Feb. 10 after Bitcoin price rallied shortly after the U.S. Bureau of Labor Statistics showed a blistering 7.5% Consumer Price Index (CPI) print. This shows that inflation continues to worsen as fiat currencies bleed out their purchasing power.
Data from Cointelegraph Markets Pro and TradingView shows that after trading below $44,000 during the early hours on Thursday, the price of Bitcoin spiked to an intraday high at $45,850 following the release of the CPI data and most major stock market indices plunged into the red.
Here’s a look at what several analysts are saying about how Thursday’s CPI print could affect the price action for BTC moving forward and what levels to keep an eye on as the world grapples with high inflation.
Bitcoin enters a new cycle
“We are in a new cycle now” according to Ran Neuner, host of CNBC’s Crypto Trader, who posted the following chart highlighting the February BTC breakout as part of a cyclical pattern that Bitcoin has been trading in over the past year.
As shown in the chart above, this is the second time in less than a year that BTC has reversed course to head higher following a steep downtrend.
“This CPI pump is confirmation that CPI/Interest rate hikes are part of the old cycle. Ever since we broke the trend line, the news is different, the narrative is different. It’s not a coincidence. Be a cyclist.”
Analysts say the multi-month correction is over
Further insight into this trend reversal following a 3-month correction was provided by technical analyst and pseudonymous Twitter user ‘CryptoBirb’, who posted the following chart detailing the range-bound trading for BTC over the past year stating “with a bit of luck, Bitcoin may see follow-through to the upside, even beyond $50,000.”
Should BTC manage to hold its momentum at these levels, “Bitcoin has near targets of $46,300 – $46,500.”
“The most important line in the sand is defined at $51,000 by the price action of Bitcoin. That level could be expected to work as a magnet for BTCUSD if we are to see follow-through to the upside.”
BTC price decouples from equities
The bullish performance seen across the cryptocurrency markets in February was addressed in comments by Dalvir Mandara, a quantitative researcher at Macro Hive, who noted that the “impressive gains” have come “on the back of markets digesting increased Fed hawkishness and pricing in more hikes, as well as the ECB pivoting to potential hikes in 2022.”
According to Mandara, the fact that the crypto market has been able to rally higher despite tighter than expected liquidity conditions “suggests macro factor may be affecting them less than before.”
Mandara pointed to Bitcoin’s correlation to tech stocks, which has now “fallen from the highs of 75% last week to 50% this week” as evidence for this shift in impact on the BTC price.
“Overall, we still think the macro backdrop is negative for crypto but on-chain/flow metrics have turned more positive so we are moderately bullish on balance.”
The overall cryptocurrency market cap now stands at $1.996 trillion and Bitcoin’s dominance rate is 41.9%.
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