Bitcoin (BTC) price returned to $ 36,000 at the start of the New York session on Wednesday, as investors expected new inflation data in May and El Salvador approved a bill converting cryptocurrencies into legal tender in the country.
The bull market?
The benchmark cryptocurrency rose 9.86% to an intraday high of $ 36,696, eliminating some of the losses it suffered in the previous session.In hindsight, the BTC / USD pair had fallen to nearly $ 31,000 on Tuesday amid fears the pair had entered a 2018-like bearish period after breaking above $ 65,000 in mid-April.
#Bitcoin on the charts: The most important levels to be observed are $ 30,000 and $ 47,000. Below $ 30,000, there is the possibility of a deeper setback towards the previous record high of $ 20,000 in late 2017. Back above $ 47,000, the focus will be returned to the current record high. $ BTCUSD #Crypto pic.twitter.com/X6d23G0FiH
to???? LMAX group (@LMAX) May 25, 2021
On the other hand, Bulls continue to project Bitcoin as their primary tool against inflation, with Mike McGlone, Bloomberg Intelligence Senior Commodity Strategist, indicates that the possibility of the cryptocurrency reaching USD 40,000 in the next few sessions is greater than USD 20,000He said:
Caption? $ 40,000 Seems More Likely than $ 20,000: Bitcoin’s June 8 slide and the revision of the $ 30,000 lower support had many of the characteristics of the extremely bearish sentiment typical of bull market floors more permanent.
The great Central American impulse
Bitcoin received additional upward momentum from El Salvador.Â The Central American country under the leadership of its President Nayib Bukele, was the first nation to allow Bitcoin as legal tender.
The law comes into effect in 90 days and enables Salvadorans to use Bitcoin to pay for and receive goods and services, and to pay taxes in cryptocurrencies.
Bukele also announced that El Salvador will use the country’s “volcanic energy” to mine Bitcoin.The announcement came in response to Tesla CEO Elon Musk’s announcement of Bitcoin suspension over environmental concerns.Musk’s decision resulted in a severe FUD among investors that caused a massive collapse in the cryptocurrency market.
Elon never expected his #Bitcoin energy FUD would be met with the Volcano Energy Hammer.
to???? Vijay Boyapati (@real_vijay) June 9, 2021
Key facts about inflation
Bitcoin’s recent uptrend also came from technical supportAround $ 31,000, traders expressed short-term optimistic belief about the cryptocurrency’s ability to hold $ 30,000 as a support in recent history.
For example on May 19th Bitcoin rose over 40% overnight after testing $ 30,000 as a reserve price.
Yuriy Mazur, Head of the data analysis department at CEX.IO Broker, He noted that despite the recent setback, the BTC / USD pair could hold around USD 30,000 levels as support.The senior analyst named higher inflation behind his bullish analogy and told Cointelegraph:
“Given Bitcoin’s recent retreat, the fact that analysts expect US CPI to climb to 4.7% could be a serious factor driving the BTC / USD pair higher. […] After all, Bitcoin could be a big winner if inflation continues to rise, which it certainly seems to be. “
The remarks came despite concerns that the Federal Reserve would eventually hike rates to bring inflation to its preferred target of 2%.US Treasury Secretary Janet Yellen made it even clearer in her interview with Bloomberg that higher interest rates would be an advantage.
A higher rate tends to dampen investor appetite for hedging assets like bitcoin and gold.
According to Yuriy, a rate hike would not hurt investor demand for Bitcoin, as expensive borrowing would reverse US stock index gains. He added:
“If the Fed takes an aggressive stance on rate hikes, it will curb inflation, but it will cause a stock market crash with significant risks as the credit for the business appreciates quickly. In this scenario, Bitcoin could also attract more funds as a store of value.” Practically the last resort in times of high economic risk, as more investors would seek a safe haven there. You invest your money. “
US CPI data will be released on Thursday.