Bitcoin Price Flips Above $26,500: What’s Next?

Bitcoin price has been showing signs of a potential short-term recovery over the past few days and even tapped its highest level in two weeks, above $26,500. The premier cryptocurrency has gained nearly 2% over the past week, erasing some of the losses made in the previous days. Even so, the asset remains 9% below in the month to date. Bitcoin’s total market cap has climbed by more than 1% over the last day to $518 billion, while the total volume of BTC traded over the same period decreased by more than 9%.

Inflation Concerns

Like most major altcoins, Bitcoin price noted a slight bearish initial response to the US Consumer Price Index (CPI) data published on September 13. Data released by the Bureau of Labor Statistics (BLS) showed headline inflation by the CPI came in at 3.7%, ahead of the predicted 3.6% year-on-year and higher than July’s 3.2% rate. Annual core CPI, which excluded food and energy prices, decreased to 4.3% in August, in line with forecasts and down from July’s 4.7% reading.

The Producer Price Index (PPI) data released on Thursday suggested bearable levels of inflation following a monthly increase of 0.7% and an annual increase of 1.6% in August. The monthly reading was higher than the estimated 0.4% increase. The core PPI came in at 0.2% for the month, in line with analysts’ expectations.

Retail sales data also published on Thursday came in stronger than expected at 0.6% in August, far ahead of the anticipated 0.1%, suggesting consumer resilience.

The larger-than-expected jump in prices leaves room for a hawkish tone from the US Federal Reserve. The high inflation readings for August could impact the decision-making of the Federal Open Market Committee (FOMC) meeting slated for next week. Markets are pricing in a 97% chance of the Fed leaving rates unchanged in their meeting next week. Notably, higher interest rates could be on the cards in the remaining meetings for the year.

Bitcoin Price Prediction

Bitcoin price has been hovering above the crucial level of $26,000 over the past few days after a slightly bearish reaction to the high inflation figures. The initial reaction was expected to be bearish since higher inflation often translates to lower demand for riskier assets. Despite the consecutive 4-day rising streak, Bitcoin price remains below the 50-day and 200-day exponential moving averages, as seen on the daily chart.

Going forward, the Bitcoin price is likely to take a downturn in the immediate term, amid the skepticism in the crypto market. If this happens, Bitcoin price could potentially fall below the next support level of $25,825.60 and $25,300. Conversely, a breach above the major hurdle at $27,065 could initiate a fresh recovery rally, invalidating my cautiously bearish thesis.

BTC Price Chart