Bitcoin (BTC) experienced a decline as the market opened on Wall Street on March 13, despite earlier gains, with US inflation indicators continuing their downward trend. According to data from various market sources, BTC/USD was trading around $81,500, reflecting a 2.3% dip for the day.
The February figures for the Producer Price Index (PPI) fell short of analysts’ expectations, mirroring the Consumer Price Index (CPI) results released the previous day. An official statement from the US Bureau of Labor Statistics highlighted that “on an unadjusted basis, the index for final demand increased by 3.2 percent for the year ending in February.” It noted that a 0.3% rise in prices for final demand goods offset a 0.2% decline in final demand services.
This decline in inflation already served as a dual advantage for cryptocurrencies and risk assets, while it simultaneously quelled a potential rebound in US dollar strength, as illustrated by the US Dollar Index (DXY). Despite these developments, both stocks and cryptocurrencies remained largely stagnant, prompting comments from analysts about the ongoing trade conflict in the US.
A recent analysis remarked that the market’s lack of reaction to inflation data that would have previously propelled the S&P 500 higher raised questions about current trading dynamics. “What’s behind this muted response? This data gives President Trump justification to continue his current approach,” the commentary suggested.
The analyst also pointed out that given the cooling inflation, the intensity of the trade conflict could escalate, explaining the market’s inability to recover losses despite the positive inflation data. They advised traders to prepare for increased volatility.
In anticipation of the Federal Reserve’s upcoming interest rate decision, market sentiment regarding monetary easing remained relatively weak, with only a 1% chance of a rate cut forecasted, according to data from the CME Group’s FedWatch Tool. The likelihood of a cut in the May meeting stood at 28%.
Popular crypto trader Josh Rager indicated that it is unlikely the Federal Reserve would adjust rates this month, referencing Fed Chair Jerome Powell’s previous statements, suggesting any cuts might come in May or June instead.
Bitcoin’s price was caught between significant areas of buying and selling liquidity on exchange order books, facing resistance at the 200-day simple moving average (SMA). Keith Alan, co-founder of a trading resource, noted that this trendline, which usually acts as support in bull markets, represented the nearest critical level for Bitcoin to reclaim. He observed that Bitcoin was encountering strong resistance at the 200-day MA for the fourth consecutive day and indicated that a recovery on that day seemed improbable, barring any unexpected announcements from the US government.
Meanwhile, monitoring data revealed important resistance levels situated just below $85,000.
This information does not constitute investment advice or recommendations. Every trading decision involves risks, and individuals should conduct their own research before proceeding.