BTC Price May Remain High and Volatile as Hype Recedes

By Harry Smith

Data show that the U.S. Consumer Price Index (CPI) rose 6.2% in October compared to last year, much higher than expected, triggering market concerns about high inflation. Consumers in U.S. and around the world are feeling the pinch of spiking inflation in 2021, leading to increasing calls for the Fed to end the loose monetary policy and raise interest rates. U.S. President Joe Biden stated after the release of October CPI data that he would take steps to curb it, which may, to some extent, affect the Fed’s interest rate hike schedule. U.S. stock index futures fell, and the three major U.S. stock indexes closed lower. The price of bitcoin rose 4.7% following the release of CPI data.

Strategy Analysis

U.S. CPI jumped 6.2% in October compared with a year earlier and core CPI also rose 4.6% year-over-year,both higher than expected. In a statement following the release of October CPI data, President Joe Biden noted, “Inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me.” The market is expected to see increased hyperinflation in the U.S., which may lead to interest rate hikes. As a result, BTC experienced a significant overnight pullback as it is increasingly affected by the U.S. CPI and U.S. stocks after entering the mainstream financial market.

Meanwhile, the Zimbabwean government officially debunked rumors saying that the country has no plans to adopt bitcoin as legal tender, which to a certain extent weakened market speculation. On-chain data shows that market sentiment has dropped back significantly, with huge selling pressure among miners. Institutional investors are also showing signs of selling off. With a stronger shorting momentum, BTC price tends to remain high and volatile. When it comes to investor attention, Layer 2 and metaverse concepts are still among the most popular segments for investment.

Market Analysis

BTC: In the past week, BTC price hit a new record high at $69,000 before it pulled back and dropped below MA5. It rebounded a little but still faced heavy selling-off pressure. On the whole, BTC tends to oscillate within the higher price zone. From the daily chart, it remains stable at MA20, but is expected to touch MA10 shortly during the upcoming fluctuation. The Bollinger Bands forms an open-type horn mouth, with prices remaining in the upper zone of the middle-rail. BTC could find strong support at around $64000 and meet significant resistance at around $70,000.

ETH: ETH continued to oscillate upward in the past week, breaking out to new highs and touching $4860. The daily chart shows that it has found effective support at MA20 and MA30, though falling below MA5 and MA10. At the same time, the EMA upward trend remains unchanged. The daily level Bollinger band shows an open-type horn mouth pattern, with prices remaining in the upper zone of the middle-rail and are expected to climb up continuously. The support level for ETH is around $4500, and the resistance level is near $4800. If it can stand stable at $4700, it may break upwards to $5000.

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