Bitcoin dipped alongside stocks after US inflation came in hotter than expected at 7.5% year over year
After dipping below $44k, BTC price recovered to within $45k as analysts outlined potential movements for the flagship cryptocurrency.
The price of Bitcoin broke above a key barrier and traded as high as $45,201 overnight Wednesday, before retreating as the broader market fell during early trades after US markets opened.
Analysts’ take on Bitcoin’s outlook
The drawdown seen earlier took shape as investors digested fresh US inflation data that came in at 7.5% against an expected 7.3% year-over-year. Risk-on assets such as crypto and equities reacted lower, with all eyes now on the Federal Reserve’s rate hike slated for March.
The S&P 500 was down 0.23% and the Nasdaq composite -0.18%, while the Dow Jones Industrial Average stayed just above the flatline.
Crypto trader and analyst Michael van de Poppe observed:
“The Consumer Price Index (CPI) results for the U.S.A. are coming in at 7.5% year-over-year, the expectations were 7.3% year-over-year.$DXY is shooting up and risk-on assets are dropping down like Bitcoin & equities.Likelihood that the FED will start rate hikes in March.”
Crypto trader Cantering Clark says Bitcoin’s dip from intraday highs has brought it back into range. He suggests the cryptocurrency will resume its recent upside momentum if the slip in stocks has also seen a low. For him, the key is for BTC to hold above $43k.
And back in range.. If the low in the indices are in and 43k holds for BTC I expect us to just resume upward.
If either of those pieces of criteria change I expect we see 41.5 down to 39 for the next area of support. pic.twitter.com/XQmpFgIGs1
— Cantering Clark (@CanteringClark) February 10, 2022
Another analyst, Rekt Capital, says the recent rally may not be over based on the Fear & Greed investor sentiment metric. He notes that at the moment, sentiment towards Bitcoin “is neutral.”
“Extreme Greed precedes local tops. So just based on sentiment alone, this BTC rally may not be close to being over just yet. Key levels such as $43100 & the 50-week EMA flipping into support would confirm this,” he tweeted.
Looking at the BTC/USD weekly chart, the 50-week exponential moving average (EMA) is currently at $44,200.
BTC/USD weekly chart. Source: TradingView
If Bitcoin recovers from today’s slump and breaks above the highlighted EMA and $45k level, analyst Ali Martinez says the main barrier will be around $48,000. Above that, the psychological $50,000 would come into play.
— Ali Martinez (@ali_charts) February 10, 2022
Bitcoin’s inflation hedge status
Bitcoin’s plunge on Thursday alongside stocks saw it continue the high correlation it’s shown with the traditional finance markets since its peak at $69,000 in November 2021. Some analysts say this means BTC is not a better hedge against inflation or as a store of value.
On Tuesday, Bank of America pointed out that Bitcoin was no longer a “good” inflation hedge given its volatility and lockstep trading with the S&P 500 and Nasdaq.
But Gemini co-founder Cameron Winklevoss believes Bitcoin is still the best hedge against inflation, adding to various such calls from within the crypto community and even mainstream investors.
Inflation hit 7.5% in January. Highest in four decades. It continues to accelerate.
The best way to shield yourself from this pernicious, silent tax on your life’s work — your blood, sweat, and tears — is bitcoin.
— Cameron Winklevoss (@cameron) February 10, 2022
At the time of writing, the BTC/USD pair was hovering around $44,900, about 2% up in the past 24 hours. The cryptocurrency remains positive over the week too, with roughly 22% in gains.
The post Bitcoin eases off resistance above $45,000: Here’s what top analysts are looking at for BTC price appeared first on Coin Journal.