As inflation is expected to rise another 0.5% in July, the flagship cryptocurrency reaches its highest point in over two months.
Bitcoin (BTC) reached its highest level in more than two months with just a few days remaining before the July inflation report.
On Aug. 8, the top cryptocurrency rose 1.65% to $45,363, continuing the upside momentum that saw it jump 21.62% since August 5, when it was at $37,300.
The momentum was also strong among Bitcoin rivals. The second-largest cryptocurrency by market capital, Ether (ETH), rose 29.78% to $2,630 on Aug. 3 and crossed over $3,100 Sunday. The Ethereum London hard fork, which was published on Aug. 5, should increase deflationary pressure on the supply of ETH.
July inflation report, on chain
On Wednesday, Aug.11, the United States Bureau of Labor Statistics will release July’s inflation report, with markets forecasting a 0.5% spike. These projections were made after the consumer price index (CPI), rose to 5.4% in June, its highest increase in 13 years.
Bitcoin bulls have responded positively to the recent inflation reports. After the May 19th crash, they effectively defended the cryptocurrency from falling below $30,000 Their recent push to increase the price of Bitcoin to $40,000, eventually leading to a slow upside rise above $45,000, is a sign that there is a strong demand for Bitcoin. This suggests that it may be coming out of its summer slump.
Chief investment officer at Moskovski Capital Lex Moskovski highlighted a Glassnode Chart that revealed dramatic spikes in entities joining the Bitcoin network. This was consistent with the growing BTC/USD rates.
“Amount of new Bitcoin entities continues to hit an all-time high,” Moskovski tweeted.
Willy Woo, an on-chain analyst, said that the continued Bitcoin momentum should propel its prices above $50,000. This is due to the supply-demand imbalance in market. He said that all investor cohorts were buying Bitcoin, which led to supply shock.
Woo referenced a chart that he had posted on July 15, when the Bitcoin market was correcting lower following a sessional peak at $36,675. Below is a graph that shows events related to Bitcoin liquidity shock on all exchanges.
The latest Bitcoin climb is not without risks. It’s based on past top-to-bottom Fibonacci Retracement Fractals.
Bitcoin has reached record highs and tends to correct towards its 200-week exponential moving mean (200-week EMA, the yellow wave), at which point it will bottom out in order to continue a bullish cycle.
After testing the 23.6 Fib support level, fake recovery rallies were seen in the BTC/USD currency exchange rate’s past two events. After facing resistance at higher Fib levels, these upside movements failed to turn into major bullish momentums.
After rebounding from the 23.6 Fib line at $7,357, Bitcoin saw a 50% increase in its value in 2019. The cryptocurrency was subject to extreme selling pressure at its 61.8 Fib level of $10,613. It eventually recovered its downward trend and crashed to $3,858 by March 2020.
Bitcoin could be subject to extreme resistance at the 61.8 Fib level at $46,792 or lower if the fractal continues.
Keith Wareing, an independent market commentator and trader, suggested that a bullish crossover between Bitcoin’s two weekly moving averages could signal the start of a multi-month bull rally. The indicator, known as MACD (Major Average Daily Divergence), was instrumental in forecasting the 2020 bull market.
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