Bitcoin price is witnessing strong momentum following a recent U.S. inflation report that came in softer than expected. The report, released Wednesday, showed that the consumer price index (CPI) increased by just 0.1% in May, well below the anticipated 0.2% rise.
This news has significantly impacted the market, with experts predicting Bitcoin could surge to $200,000 by year-end. The CPI data is seen as a catalyst that could drive accelerated gains for Bitcoin, particularly if it continues to benefit from a favorable macroeconomic environment.
According to Matt Mena, crypto research strategist at 21Shares, the recent CPI print could lead to Bitcoin breaking out of its current range. He stated:
“If BTC breaks out of the $105K-$110K range with conviction, we could see a sharp move to $120K and, more importantly, reach our year-end price target of $138.5K by the end of the summer.”
U.S. Inflation and Bitcoin Price Potential
The CPI report from the U.S. Labor Department showed that inflation remains cooler than expected, rising by only 2.4% year-over-year, with core inflation holding steady at 2.8%. These numbers are fueling optimism about the possibility of the Federal Reserve easing its monetary policy later this year.
Market expectations now point to the Fed cutting interest rates in the coming months. Traders have already priced in expectations of rate cuts, with market probabilities indicating a full rate cut for October. As a result, Bitcoin’s price could benefit from these changes, with renewed institutional interest and a surge in Bitcoin flows driven by improved macro clarity.
Technical Outlook: Resistance and Support Levels
Bitcoin price has been facing technical resistance around the $105,000–$110,000 range. After a recent rally, the cryptocurrency failed to retest its all-time high of $111,980. As of Thursday, Bitcoin continues to trade below $108,000, showing signs of a pullback.
The first key support level to watch is $106,406, with further support at the 50-day Exponential Moving Average (EMA) around $102,471. If Bitcoin fails to hold above these levels, it could face further declines. On the upside, breaking through $120,000 could signal a bullish shift, pushing Bitcoin price toward the $138,500 target.
Whale Accumulation: Bullish Signals for Bitcoin Price
Whale activity is a key factor driving the current bullish sentiment surrounding Bitcoin. Over the past 30 days, whale wallets have increased their Bitcoin holdings by 5.12%. This suggests that large investors are positioning themselves for a potential rally. Whale accumulation often precedes significant price movements, and this trend aligns with historical behavior during Bitcoin’s breakout phases.
While retail and mid-tier investors have reduced their exposure, the accumulation by large holders could set the stage for further upward movement. As institutional investors and Bitcoin treasuries continue to increase their holdings, the demand for Bitcoin is expected to rise, potentially pushing the price higher.
Address Activity: Mixed Signals in the Market
Despite the rising transaction volume, Bitcoin’s address activity paints a more mixed picture. According to data from IntoTheBlock, zero-balance addresses have surged by 23.29%, while new and active addresses have fallen by 23.90% and 9.12%, respectively.
| Month | Minimum Price | Average Price | Maximum Price | Potential ROI |
|---|---|---|---|---|
| June | $109,849.11 | $124,396.17 | $138,943.23 |
27%
|
| July | $101,500.24 | $111,877.75 | $122,255.25 |
11.8%
|
| August | $101,196.39 | $104,096.31 | $106,996.23 |
-2.2%
|
| September | $100,272.24 | $100,086.90 | $99,901.55 |
-8.7%
|
| October | $104,998.60 | $102,233.84 | $99,469.07 |
-9.1%
|
| November | $100,744.29 | $100,186.94 | $99,629.58 |
-8.9%
|
| December | $104,464.64 | $100,549.22 | $96,633.79 |
-11.7%
|
The lack of new and active addresses could limit short-term upside potential. However, if Bitcoin price breaks key resistance levels and attracts more retail investors, the market could see a significant shift toward increased participation and higher prices.
Market Sentiment: Neutral to Bullish
Bitcoin’s market sentiment remains relatively neutral, with spot netflow data showing balanced inflows and outflows. The current equilibrium reflects caution among traders, as many await a clear breakout signal. If Bitcoin price successfully breaches its resistance levels, the market sentiment could turn decisively bullish, fueling further price gains.
Technical indicators also reflect some indecisiveness. The Relative Strength Index (RSI) is currently at 54, indicating that there is still room for upward movement. Additionally, the Moving Average Convergence Divergence (MACD) is coiling against each other, suggesting uncertainty in the market.
Fear & Greed Index
The Crypto Fear & Greed Index has recorded a reading of 71, signaling a period of greed in the market. This suggests that investor sentiment is positive, with many feeling confident and willing to take on more risk. The heightened demand for cryptocurrencies reflects the growing optimism among market participants.
Conclusion
Bitcoin’s price is on the verge of a potential breakout, driven by favorable inflation data and increasing institutional confidence. The softer-than-expected CPI report has provided a strong catalyst for Bitcoin’s upward momentum.
If Bitcoin price breaks key resistance levels and maintains its momentum, a rise to $200,000 by the end of the year is within reach. However, traders will need to monitor technical levels closely for confirmation of the breakout, as Bitcoin navigates crucial resistance zones.
Frequently Asked Questions (FAQ)
1. What caused the recent surge in Bitcoin price?
A softer-than-expected U.S. inflation report has provided a favorable environment for Bitcoin, driving expectations of potential rate cuts from the Federal Reserve.
2. What is Bitcoin’s year-end target?
Experts, including Matt Mena of 21Shares, have set a year-end target of $138,500, with some analysts even predicting $200,000 if current momentum continues.
3. What technical levels should traders watch for in Bitcoin price?
Bitcoin is testing key resistance at $105,000-$110,000, with support levels at $106,406 and $102,471. A breakout above resistance could signal a bullish trend.
4. How does inflation affect Bitcoin price?
Cooling inflation often signals potential monetary easing, which benefits assets like Bitcoin by increasing investor confidence and driving demand.
Appendix Glossary of Kyyterms
Bitcoin Price: The current market value of Bitcoin fluctuates based on supply and demand dynamics.
CPI (Consumer Price Index): A measure that examines the weighted average of prices of a basket of consumer goods and services.
Whale Activity: The actions of large investors or holders of Bitcoin who control significant portions of the cryptocurrency.
Exponential Moving Average (EMA): A type of moving average that gives more weight to recent prices, used to track trends.
RSI (Relative Strength Index): A momentum oscillator that measures the speed and change of price movements to identify overbought or oversold conditions.
MACD (Moving Average Convergence Divergence): A trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.
Spot Netflow: The measure of the net inflow or outflow of Bitcoin into or out of exchanges, indicating market sentiment.
Reference
CoinDesk – coindesk.com
FXStreet – fxstreet.com
