The latest US inflation data had a significant impact on the Bitcoin price and most of it cryptocurrency market, with a few exceptions. According to a report from the Ministry of Labor, inflation rose more than expected in January, due to higher housing prices.
In addition, the Consumer Price Index (CPI), which measures the prices consumers across the economy face for goods and services, showed an increase of 0.3% this month. On a twelve-month basis, the CPI was 3.1%, slightly lower than December’s 3.4%.
Bitcoin Price Drops Amid Higher-than-Expected CPI Figures
According to recent reportsThe higher-than-expected CPI numbers could pose challenges for the Federal Reserve (Fed), as officials expect inflation to slow and reach their annual target of 2%. The central bank aims to adjust monetary policy, which has been tight for two decades.
However, the increase in January inflation could delay the Fed’s plans to cut rates because more data is needed before a rate-cutting cycle can be initiated. This outcome disappointed those who expected inflation to decline and led to a reassessment of the timing for possible interest rate adjustments.
Market information platform Santiment says about this reported that the CPI result of 3.1% caused market capitalization losses in the cryptocurrency and stock markets. The Bitcoin price, which crossed the $50,000 mark for the first time in more than two years, has fallen below $49,000 in response.
According to the crypto platform’s analysis, this mild setback is likely to polarize public sentiment, potentially leading to significant panic selling. In such a scenario, the justification for dip purchases becomes more viable, but sentiment may turn negative.
Bitcoin’s Market Cycle Patterns
Market expert Crypto Con has done that identified a striking pattern in Bitcoin market cycles, especially regarding the 20 Week Exponential Moving Average (EMA). Despite growing concerns over inflation data, the analysis suggests that Bitcoin’s price behavior tends to follow a consistent six-step pattern, with significant implications for support and potential correction levels.
According to Crypto Con’s analysis, Bitcoin’s price movement in every market cycle has followed a similar pattern with respect to the 20-week EMA. The pattern unfolds as follows:
First, as seen in the chart below, Bitcoin price breaks above the moving average, marking the beginning of a new cycle and a notable uptrend. However, after the completion of the first run, the price returns to the moving average and falls below the moving average, indicating a temporary shift in sentiment.
Despite the temporary setback, Bitcoin’s price is once again breaking above the moving average, signaling the beginning of a real rally and resumption of the uptrend. At this stage, price action creates a false retest support, narrowly missing the moving average as a crucial support level. This false retest is common in Bitcoin market cycles.
After the false retest, Bitcoin begins a second run, signifying further progress in the market cycle. Bitcoin’s price is currently in this phase.
According to Crypto Con’s analysis, the full correction in Bitcoin’s price may not need to be that deep, as the moving average currently sits at around $40,000.
Ultimately, the analysis’s suggestion that the Bitcoin price will not fall below the $40,000 level during the ongoing bull run, even despite expected corrections, is particularly encouraging for bullish investors.
Bitcoin is trading at 48,600, down 3% in the last 24 hours.
Featured image from Shutterstock, chart from TradingView.com
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