Inflation Uptick and Fed Meeting
Cryptocurrencies traded in a holding pattern on Wednesday after the latest Consumer Price Index (CPI) report showed an uptick in inflation in August. Headline prices rose 0.6% month-over-month and 3.7% on an annual basis, primarily driven by a spike in energy prices. Investors turned their attention to next week’s Federal Reserve meeting, where the central bank will determine if additional interest rate hikes are needed. The CME FedWatch Tool now gives a 97% probability that the Fed will pause its rate hikes, up from 92% a day ago.
Bitcoin Price Movement
Data provided by TradingView shows that Bitcoin’s price initially climbed higher after the CPI report, reaching a high of $26,416. However, it pulled back to support above $26,100, which has been a consistent level of resistance since mid-August. Kitco senior technical analyst Jim Wyckoff noted that September Bitcoin futures prices were higher again, indicating a rebound after hitting a six-month low on Monday. Despite the recent stabilization, Wyckoff believes that more needs to be done to suggest a price uptrend.
The Impact of Interest Rates
MN Trading’s Trade Letter pointed out that risk-on assets perform less favorably when interest rates are aggressively increased. However, recent CPI reports showing moderating inflation give the Fed fewer reasons to continue raising rates aggressively. This provides risk-on assets with more room to increase in value. MN Trading analyst Daan Foppen commented on Bitcoin’s price action, noting an overall shaky chart structure but still being in an uptrend. Foppen mentioned the likelihood of an initial downward move based on price patterns and liquidity engineering.
Trading Strategies and Technical Indicators
Foppen recommends a strategy called ‘milk the range’ during choppy market conditions. This strategy involves trading the extremes of the range until it no longer works, providing stability and preventing excessive chart monitoring. However, Adam Button, chief currency analyst at Forexlive.com, warns of a potential bearish signal with the recent formation of a death cross on the Bitcoin daily chart. The previous death cross in 2022 led to a significant decline in Bitcoin’s price. Button advises caution and suggests watching key support levels if a break occurs.
Altcoin Market and Overall Cryptocurrency Statistics
The top 200 altcoins traded mixed, with some notable gainers including VeThor Token (VTHO), Storj (STORJ), Galxe (GAL), and Metal DAO (MTL). VTHO experienced an increase of 57% after being unexpectedly added to Coinbase. The overall cryptocurrency market cap currently stands at $1.04 trillion, with Bitcoin holding a dominance rate of 49.1%.