The cryptocurrency market responded negatively to the release of Consumer Price Index on Tuesday. The data showed an inflation of 8.30% y/y while the core CPI was also beyond expectations. This means that there is a possibility of a 1 pp interest rate hike. Overall, the inflation data is not a good sign for the crypto market, which could face another wave of volatility.
The Consumer Price Index (CPI) is a key index that measures the increase or decrease in the price paid by the consumers on a monthly basis. This makes CPI an important indicator of the state of the economy.
Goldman Sachs predicts interest rate hike
Goldman Sachs predicts a 75bp hike in September followed by 50bp hikes in November and December.
The CME Fed Watch Tool showed the possibility of a 20% chance of a 100 bps or 1 pp hike following the CPI data release.
After the CPI data release will be the Fed’s FOMC meeting scheduled for September 21. Outcome from the meeting would decide whether there would be 100 bps interest rate hike or not. The crypto market is also anticipating the successful completion of The Ethereum Merge this week. Market analysts feel The Merge could prove to be a turnaround event for crypto industry, which was marred by a series of setbacks.
Earlier in the day, the prices of Bitcoin and Ethereum fell following the release of Consumer Price Index data.
Bitcoin price analysis
Bitcoin price attempted to gain strength above the $22,500 resistance. The price even spiked above the $22,750 resistance zone and the 100 hourly simple moving average. However, BTC failed to gain strength and topped near the $22,768 level.
As a result, there was a bearish wave below the 100 hourly simple moving average. Bitcoin price even tested the $20,000 zone. A low is formed near $19,921 and the price is now consolidating losses.
On the upside, an immediate resistance is near the $20,600 level. It is near the 23.6% Fib retracement level of the recent decline from the $22,768 swing high to $19,921 low.
Source: BTCUSD on TradingView.com
The next major resistance sits near the $21,350 level. The next major support is near the $19,500 and $19,400 levels. A downside break below the $19,400 level might send the price towards the $18,500 support.
Hourly MACD – losing pace in the bearish zone
Hourly RSI (Relative Strength Index) – recovers from the oversold levels.
Major Support Levels – $20,000, followed by $19,400.
Major Resistance Levels – $20,600, $21,000 and $21,350.
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