Following the release of the Consumer Price Index (CPI) data for the month of August, the Bitcoin price saw a major rebound. From trending around the $55,000 level, the price has since recovered and bulls continue to fight to turn the $58,000 resistance into support. However, despite the strength being shown by Bitcoin during this time, there is still skepticism surrounding the recovery. Mainly, the questions have been on whether this is a true recovery or if the BTC price is headed for further decline.
CPI Brings Fresh Hope
The Consumer Price Index (CPI) data represents how much consumers are paying for consumer goods and services at different times. Basically, it calculates the change in the price of these goods and services, showing whether purchasing power has gone up on down.
For the month of August, the CPI data came in lower than expected, making it a positive for the financial markets. According to reports, instead of the 2.6% annual increase that experts expect, the CPI data came out to a 2.5% increase annually.
This comes as the inflation data rose higher than the forecasted month-on-month 0.2% and came out to 0.3%. However, it has not affected the positivity brought about by the CPI data, especially given that the 2.5% increase in the lowest recorded levels since February 2021, so more than three years.
The Bitcoin price immediately reacted positively to the CPI data release. It jumped around 3% in a single day, retesting the $58,000 level not too long after. However, with the positive sentiment brought about by the CPI data already waning, the price could see a drawdown from here.
Bitcoin And Crypto Market Still In Fear
Although there has ben a recovery in the Bitcoin and crypto market sentiment, is still far from a perfect situation for a price surge. From last week to this week, the crypto Fear & Greed Index has fluctuated between 22 and 37 on the scale. This means that sentiment is still firmly in the bearish territory.
During times like these, inflows into the market are often minimum as investors figure out their next move. This could explain why the Bitcoin price has been trading in a very tight range below $60,000 since then. However, if the bulls continue to dominate, then reclaiming support above $60,000 could be the next stop.
With Spot Bitcoin outflows still continuing, and BTC miners selling a large chunk of their holdings, this decline could continue. In that case, then the Bitcoin price could be falling toward $50,000 again.
Featured image created with Dall.E, chart from Tradingview.com
