Bitcoin continues to move without any changes near the $19k mark. The wedge pattern on the daily chart is approaching its final formation. Considering that important statistics will be published today, we should expect an exit outside the current range.
Fundamental factors
In anticipation of the publication of reports on rising inflation, the FOMC issued "minutes", which, among other things, indicated that at some point the agency was ready to slow down the rate increase. However, the regulator acknowledges the fact that inflation is declining more slowly than expected.
Given this, the Fed considers it necessary to raise the rate, despite the slowdown in the labor market. Also, most members of the regulator expressed confidence in the need to keep the rate at a high level for the required period.
The Fed is trying to calm the markets but does not indicate specific dates for the end of its aggressive monetary policy. It is important to note that the Fed's rate may change on a monthly basis, depending on progress in reducing inflation. That is why today will be filled with volatility in the cryptocurrency market.
JPMorgan believes that if the inflation report is higher than 8.3%, then the markets will actively sell high-risk assets. This will lead to another wave of falling stock and cryptocurrency markets. In addition to the impulsive reaction, poor reporting will affect the future policy of the Fed.
DXY Analysis
The US dollar index awaits the publication of reports on the consumer price index with great excitement. In case of unsatisfactory results of the CPI, DXY may hope for the next stage of growth and the achievement of new local highs. For the most part, it is on the US dollar index that it is necessary to analyze the results of the publication of financial statements.
We are accustomed to bitcoin's impulsive and illogical movements after breaking news. DXY more accurately reflects the local change in market conditions. The asset corrected to 110, after which it resumed its upward movement and reached the level of 113. Selling pressure stopped the advance of DXY, but the CPI report could change the situation.
BTC/USD Analysis
The main cryptocurrency continues to remain in a narrow range, and as of writing, there is no reason to believe that the asset is successfully implementing a bullish momentum with a positive news background. Low trading volumes, social sentiment, and weak buying activity are the main barriers for BTC to break out of the range.
Institutional activity in the Bitcoin network has also fallen to local lows. BTC transactions worth between $100,000 and more than $1 million fell to the bottom that was formed in 2020. At the same time, the passive accumulation of BTC by long-term investors continues. The balance of Bitcoin on the exchanges fell below 9%.
All these factors have led to the fact that trading activity in the network of the main cryptocurrency has been reduced to an absolute minimum. Technical indicators confirm the persistence of the flat trend in BTC. RSI and Stochastic are moving flat, while MACD remains below zero.
Results
With the publication of positive CPI reports, a short-term increase in Bitcoin quotes is likely. However, this is more likely to be an impulse reaction and not the first stage of the realization of a bullish momentum. In this case, the price can reach the level of $20.4k, where the downward trend line passes. But the asset is unlikely to break through this range due to low trading volumes.
In a negative scenario, Bitcoin has every chance to update the local bottom below $17.6k. Over the four months of consolidation, investors have formed a fount of liquidity below the local bottom. And given the catastrophically low trading volumes, there is no doubt that until this "harvest" is collected, BTC will not begin a full-fledged growth.
