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Bitcoin has reached $65,200 today, while Ethereum is just a step away from the $1,900 level.
Expectations surrounding the June inflation report, which were warned about the day before, were proven correct but in the opposite sense: instead of a troubling acceleration, the market witnessed the sharpest slowdown in several years. The U.S. Bureau of Labor Statistics recorded a monthly decrease in consumer prices of 0.4%, compared with a forecast of 0.1%, the largest monthly drop since the pandemic in April 2020. Year-on-year, inflation slowed to 3.5% versus expectations of 3.8% and May's 4.2%, while the core measure, excluding food and energy, remained at zero month-on-month growth instead of the predicted 0.2%, dropping in year-on-year terms to 2.6% from 2.9% in May.
The reaction from the cryptocurrency market was nearly instantaneous and sharp. Bitcoin rose by about 2.24%, adding around $28 billion to its market capitalization, while Ethereum showed an even stronger movement, increasing by nearly 5% with a capitalization gain of about $10.8 billion. This surge was accompanied by the liquidation of short positions totaling over $134 million within an hour, further accelerating the upward movement.
The reason for such a sharp reaction lies in the context preceding the report. The Federal Reserve Committee, led by Kevin Warsh, had openly discussed not a reduction but an increase in the rate at the July 29 meeting over the past few weeks, and persistent inflation at the beginning of the year, combined with unfavorable oil price dynamics, made such a scenario a realistic possibility. This risk had pushed Bitcoin down to $61,600 in the days leading up to the report, while the softer-than-expected report eliminated the main catalyst for a possible rate hike.
However, the data weakened the risk of a rate hike but did not signal a reduction. Markets are still pricing in about a 70% probability that the rate will remain unchanged at the July meeting.
The sustainability of the current rebound will be tested on Wednesday, July 15, when the Producer Price Index report is released, which traditionally precedes consumer price dynamics. An additional risk to maintaining the rally is geopolitics: escalation surrounding Iran and a possible new spike in oil prices could make the next inflation report much less favorable, and it seems Warsh intends not to rule out a rate hike if price pressures prove resilient again.
All of this will clearly affect the cryptocurrency market's current bullish potential.
Regarding short-term trading, the strategy and conditions are described below.
Scenario #1: I plan to buy Bitcoin today upon reaching an entry point around $65,300 with a target for growth to the level of $66,000. At around $66,000, I intend to exit my buy positions and sell immediately on the bounce. Before buying on the breakout, ensure that the 50-day moving average is below the current price and that the Awesome indicator is in the positive zone.
Scenario #2: I can also buy Bitcoin from the lower boundary at $64,800 if there is no market reaction to its breakout to the downside, targeting levels of $65,300 and $66,000.
Scenario #1: I plan to sell Bitcoin today upon reaching an entry point around $64,800 with a target for a drop to the level of $64,200. At around $64,200, I intend to exit my sell positions and buy immediately on the bounce. Before selling on the breakout, ensure that the 50-day moving average is above the current price and that the Awesome indicator is in the negative zone.
Scenario #2: I can also sell Bitcoin from the upper boundary at $65,300 if there is no market reaction to its breakout to the downside, targeting levels of $64,800 and $64,200.
Scenario #1: I plan to buy Ethereum today upon reaching an entry point around $1,895 with a target for growth to the level of $1,920. At around $1,920, I intend to exit my buy positions and sell immediately on the bounce. Before buying on the breakout, ensure that the 50-day moving average is below the current price and that the Awesome indicator is in the positive zone.
Scenario #2: I can also buy Ethereum from the lower boundary at $1,877 if there is no market reaction to its breakout to the downside, targeting levels of $1,895 and $1,920.
Scenario #1: I plan to sell Ethereum today upon reaching an entry point around $1,877 with a target for a drop to the level of $1,852. At around $1,852, I intend to exit my sell positions and buy immediately on the bounce. Before selling on the breakout, ensure that the 50-day moving average is above the current price and that the Awesome indicator is in the negative zone.
Scenario #2: I can also sell Ethereum from the upper boundary at $1,895 if there is no market reaction to its breakout to the downside, targeting levels of $1,877 and $1,852.
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