Crypto investors will be watching key US economic data, including the US CPI, this week for clues on the Federal Reserve policy decision to be announced on May 2-3. Investors hope that the US CPI, PPI and jobless claims will contribute to Bitcoin’s 70% rally this year. Meanwhile, a legendary trader talks about short squeeze for leading crypto.
Analysts predict CPI will fall
cryptocoin.comLast month, the Federal Reserve said it would consider easing monetary policy amid signs that the U.S. economy may be cooling off. FactSet analysts expect the US CPI to continue to cool. When the data is released on April 12, a 0.3% increase in CPI is expected.
February data pointed to a decline in US inflation despite the fact that the core CPI, which does not include food and energy prices, reached its highest level in the last five months. CPI increased by 0.4% last month, while housing costs contributed 70% to this increase and this trend is expected to continue in March. The Producer Price Index, a measure of wholesale inflation, fell 0.1% last month.
Crypto market players to evaluate FOMC minutes
Meanwhile, the minutes of the Fed’s Open Markets Committee meeting on March 21-22 will be released on April 13. The minutes will explain the factors that led to a 25 basis point hike in interest rates at the March meeting. The minutes can also give investors insight into the Fed’s next move. It is possible for Bitcoin to experience some volatility after the minutes are released.
Attentive investors will also gather at the Spring Meeting of the US and Europe’s top finance ministers to be held in Washington, April 10-16, to look for clues to their next policy decision. Meanwhile, Eastern economies such as India and China criticized the West’s interest rate hikes in the range of 4.75%-5%, arguing that it contributed to the recent failures of US banks Silicon Valley and Silvergate.
Hardening in oil dampens optimism in the job market
A tight labor market is putting pressure on the central bank to keep raising interest rates to fight inflation, Fed Chairman Jerome Powell said last month. However, seasonally adjusted job application numbers revealed that the U.S. job market is looser than Powell initially noted. Thus, it eliminated an important driving force behind the further increase.
Accordingly, CME Group’s FedWatch Tool predicts a 33.3% chance of a pause in the Fed’s rate hikes. However, the probability of raising interest rates by 0.25% at the next meeting of the central bank is 66.7%. This scenario, which is likely to be affected by the increase in oil prices, will increase the total interest rate to 5%-5.25%.
The recent collapses of Silicon Valley and Silvergate Bank will likely also have an impact on the next Fed meeting. High interest rates have caused crypto-friendly banks to sell long-term Treasury instruments at large losses to provide liquidity to process withdrawals. Silicon Valley Bank called buyers last month. Silvergate announced its voluntary liquidation in February, following the crisis of trust triggered by the collapse of FTX in November last year.
Legendary trader talks short squeeze for leading crypto
John Bollinger, a prominent technical analyst and creator of Bollinger Bands, recently suggested on Twitter that Bitcoin (BTC) is on the verge of experiencing a ‘squeeze’. In his tweet, Bollinger stated that the current bandwidth value for the leading coin is the lowest at 96.5 and although he prefers at least 125 periods, this should alert savvy traders of an impending change in the volatility regime.
Bollinger Bands are a popular technical analysis tool that measures an asset’s price volatility by plotting standard deviations above and below a moving average. When the bands narrow or “squeeze”, they typically indicate that a significant price move up or down is about to happen.
In a follow-up tweet, Bollinger shared another view of the BTC squeeze using TrendSpider’s multi-timeframe analysis, revealing that a squeeze and expansion is already underway on the higher timeframe, while a squeeze is forming on the lower timeframe. .
This prediction comes after Bollinger’s previous Twitter exchange with analyst Bob Loukas, who noted that Bitcoin appears to be “curling up and tightening” and putting pressure on it. “We’re almost in a squeeze,” Bollinger added to the bullish sentiment. The expectation of Bollinger Bands tightening means that the cryptocurrency market could soon witness increased volatility and significant price action for Bitcoin.
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