In the wake of latest client value index (CPI) data, Bitcoin once more found it difficult to break through its critical resistance level, coiling back to its starting position after almost crossing the $31,000 threshold.
According to Glassnode co-founder Yann Allemann, carefully placed purchase and sell divisions intended to reduce volatility were what caused the cryptocurrency’s quick spike and subsequent decline. Bitcoin may have already priced in the financial indicators based on its modest response to the CPI data.
Just before the release of the CPI data, the Bollinger Bands, a tool used by traders to identify periods of high and low market volatility, tightened to their lowest level since January. This tightening sparked a sudden increase in Bitcoin’s value. However, this increase was brief since purchase and sell partitions, set up in advance of volatility, effectively muted the expected value changes.
Allemann points out that despite these changes, open interest in Bitcoin remains low and there is little indication of movement in advance of the release of the CPI data.
The cryptocurrency market seems prepared for the recent inflow of capital, indicating a potential slowdown in the upward trend of Bitcoin’s price.
Evidently, the macroeconomic environment may be working in Bitcoin’s favour as well. With core CPI inflation at 4.8% and annual CPI inflation for June hitting 3%, both marginally below the market expectation of 3.1%, the Federal Reserve may decide to adopt a more dovish approach on financial policy.
This change, together with the US dollar index (DXY) hitting a two-month low of 101.16, may lessen Bitcoin’s strain and give it the breathing room it needs to increase.
