BTC Bulls to Target $31,000 on US Wholesale Inflation and Jobless Claims

Key Insights:

• BTC ended a four-day winning streak on Wednesday, falling by 1.03% to end the day at $29,879.
• US economic indicators and the FOMC meeting minutes left BTC in negative territory.
• However, the technical indicators remain bullish, signaling a run to $35,000.

On Wednesday, bitcoin (BTC) fell by 1.03%. Partially reversing a 1.95% gain from Tuesday, BTC ended the day at $29,879. The bearish session left BTC short of Tuesday and the current year high of $30,494.

After a mixed morning, BTC rose to a midday high of $30,468. Falling short of the First Major Resistance Level (R1) at $30.596, BTC fell to a mid-afternoon low of $29,677. However, finding support at the First Major Support Level (S1) at $29,681, BTC revisited the $30,000 handle before falling back into negative territory.

US CPI Report Sends BTC into Negative Territory

It was a busy Wednesday session. The US CPI Report was in focus. Ahead of the report, investors expected the Fed to lift rates by 25 basis points in May. While the numbers were mixed, a pickup in core inflation supported the probability of a 25-basis point interest rate hike, leading BTC to sub-$30,000.

The US annual inflation rate softened from 6.0% to 5.0% versus a forecasted 5.2%. However, the core inflation rate accelerated from 5.5% to 5.6%, giving the Fed hawks reason to pursue another rate hike.

BTC initially responded favorably to the CPI report before hitting reverse on the core inflation numbers. The probability of a 25-basis point Fed interest rate hike declined modestly in response to the CPI Report and the overnight FOMC meeting minutes.

According to the FedWatchTool, the probability of a 25-basis point interest rate hike fell from 72.9% to 65.2% overnight.

While the CPI Report delivered a pullback, BTC avoided an extended reversal in response to the FOMC meeting minutes. Talk of hitting the pause button was bullish, while the expectation of a banking crisis-fueled recession was BTC negative.

BTC tracked the NASDAQ Composite Index throughout the afternoon session. The NASDAQ fell by 0.85%. Things were no better this morning, with the NASDAQ mini down 10.25 points.

The Day Ahead

It is a busy day on the US economic calendar. US wholesale inflation and jobless claims figures will influence the afternoon session. Softer wholesale inflation and a rise in jobless claims could reduce the chances of a 25-basis point Fed interest rate hike in May.

However, weaker-than-expected numbers would fuel recessionary fears, which would pressure BTC and the broader crypto market.

While the US economic calendar will influence, investors should monitor the crypto news wires for regulatory activity and lawmaker chatter. The IMF/World Bank Spring Meetings got underway on Wednesday. Cryptos will likely be among the topics of discussion.

However, updates from the ongoing SEC v Ripple case and Binance and Coinbase-related news will need consideration.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.07% to $29,901. A bullish start to the day saw BTC rise from an opening price of $29,884 to an early morning high of $29,901.

Technical Indicators

BTC needs to move through the $30,008 pivot to target the First Major Resistance Level (R1) at $30,339 and the Wednesday high of $30,468. A return to $30,000 would signal an extended bullish session. The crypto news wires and the US economic indicators should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $30,799 and resistance at $31,000. The Third Major Resistance Level (R3) sits at $31,590.

Failure to move through the pivot would leave the First Major Support Level (S1) at $29,548 in play. However, barring a Fed-fueled sell-off, BTC should avoid sub-$29,500 and the Second Major Support Level (S2) at $29,217. The Third Major Support Level (S3) sits at $28,426.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($28,908). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, sending bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($28,908) would support a breakout from R1 ($30,339) to target R2 ($30,799) and $31,000. However, a fall through S1 ($29,548) would bring S2 ($29,217) and the 50-day EMA ($28,908) into view. A fall through the 50-day EMA would send a bearish signal.