Both equities and cryptos could receive a boost if the US inflation data comes in lower than last month’s 8.5%
After falling to mid-2021 lows below $30,000, the bitcoin price bounced partially on Tuesday. However, the digital currency failed to attract more solid buying interest and came back under pressure today. The BTCUSD pair is holding marginally above the $30,000 figure, losing nearly 2% on the day.
As the correlation between stocks and crypto space persists, the most popular cryptocurrency stays pressured as risk-off sentiment continues to dominate global financial markets this year. Wall Street indexes recovered marginally on Tuesday, but still stay weak and vulnerable to further losses amid lingering concerns over economy, geopolitics, central banks’ rates, oil supply issues, etc.
In the near term, however, both equities and cryptos could receive a boost if the upcoming US inflation data comes in lower than last month’s 8.5%. Any sign of peaking inflation would be cheered by investors as slower rise in consumer prices suggests the Federal Reserve may opt to raise rates less aggressively down the road. In this scenario, the dollar would retreat further from twenty-year highs, thus adding to recovery momentum in the cryptocurrency market.
Technically, the outlook for bitcoin deteriorated after the $30,000 psychological support was derailed for the first time in nearly a year. Now, the BTCUSD pair needs to hold above $29,700 in order to regain the upside momentum in the medium term. The immediate upside target arrived at $32,600, followed by $34,300. At this stage, however, risks remain tilted to the downside, as the prices hold well below the key moving averages while the daily RSI is pointing south in the oversold territory.
The overall tone in the market would stay bearish as long as Wall Street stocks struggle amid Fed’s aggressive tightening measures coupled with rising concerns about a possible recession in the United States.