Bitcoin moved inversely to the dollar at the beginning of this week as traders awaited the June CPI report due Tuesday. Bitcoin (BTC) prices steadied on Tuesday after closing the previous session at a 3.41% loss, supported by a weakening dollar sentiment ahead of a key United States' inflation report due later today. Spot BTC/USD exchange rate rose by a modest 1.31% to $33,096 after bottoming out on Monday at $32,996 on Coinbase exchange. The CME Bitcoin Futures was up 1.64% from its previous session's low of $32,600.
Meanwhile, the US dollar index was down about 0.03% ahead of the London opening bell. The index represents the greenback's strength against a basket of top foreign currencies.
Bitcoin and the dollar moved inversely in the week of key inflation reports and a crucial congressional testimony from the Federal Reserve Chairman Jerome Powell. On Tuesday, the US Consumer-Price Index (CPI) expects to post another significant spike in June, highlighting a run-up in inflation as the economy attempts to recover from the coronavirus pandemic slowdown. A Reuters poll of economists noted that the CPI might have increased by 0.5% from May and 4.9% from a year earlier.
Many traders bet on Bitcoin against the prospects of higher inflation, partly due to popular narratives that project the flagship cryptocurrency as a hedge against central banks' inflationary policies that hurt fiat currencies' purchasing power.
In detail, the Federal Reserve has been running a $120 billion monthly asset purchase program since March 2020 while keeping its benchmark lending rate near zero. As a result, the U.S. central bank's policies have doubled the size of its balance sheet to more than $8 trillion. Meanwhile, the same period has witnessed Bitcoin spiking by up to 1,528%—from $3,858 to almost $65,000.
The cryptocurrency declined by more than half by the said mid-April peak but sustained its overall bullish bias by relentlessly holding $30,000 as its psychological price floor. The support came extremely handy following the previous two CPI reports showing that inflation jumped to 4.2% in April and 4.9% in May.
"The uptick in the CPI readings is an indication that the economy has not healed completely from the pangs of the pandemic, and the crypto market is trailing the negative inflation figures," Gustavo De La Torre, director of business development at N.exchange, told Cointelegraph. He added that lower Bitcoin prices combined mixed economic outlook would drive more investors to accumulate the cryptocurrency. "Should the buyup intensify, a price push up to $40,000 for Bitcoin may be seen in the short term," added De La Torre.
Additionally, Konstantin Anissimov of CEX.IO warned about Fed's potential hawkish reaction to further inflation hikes, noting that it might prompt the central bank to unwind its bond-buying program and cut interest rates earlier than expected.
"As things stand, the Federal Reserve has increased the size of its balance sheet from early 2020 to more than $8 trillion — a substantial rise," Anissimov said, adding that lower crypto prices would keep serving as the right hedge against inflationary fears for the time being. He further noted: "Both Bitcoin and Ethereum with the renewed buy-ups are likely to retest new price levels at $45,000, and $3,000, respectively."
On-chain indicators continued to point towards an ongoing Bitcoin accumulation. As of the last week's close, as per Glassnode's data, entities with little history of selling continued piling up Bitcoin from weaker hands, while net exchange flows dipped into negative territory, suggesting that traders have been withdrawing their Bitcoin from trading platforms to hold.
"Retail has been buying heavily for weeks now, but we finally got the uptick in whales that we were waiting for," noted Will Clemente, an independent market analyst. "There were 17 new whales birthed on the blockchain this week, while at the same time the overall holdings of whales increase up by 65,429 BTC."
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||7d price change|
|1||BTC||Bitcoin predictions||87.6%||23||$19 477.75||4.45%||1.63%||$373 264 823 304|
|2||ETH||Ethereum predictions||66.8%||71||$1 335.97||4.93%||3.54%||$163 755 405 431|
|3||USDT||Tether predictions||92.8%||1||$1.000060||0.01%||0%||$67 960 262 498|
|4||USDC||USD Coin predictions||96%||1||$1.000123||0.01%||0.01%||$48 707 702 464|
|5||BNB||Binance Coin predictions||86%||15||$280.78||4.22%||4.60%||$45 299 859 595|
|6||XRP||XRP predictions||59.6%||83||$0.440273||4.36%||3.80%||$21 969 915 706|
|7||BUSD||Binance USD predictions||90.8%||1||$1.000647||0.05%||-0.01%||$21 055 852 896|
|8||ADA||Cardano predictions||80%||35||$0.437309||2.31%||-3.28%||$14 973 500 079|
|9||SOL||Solana predictions||81.2%||31||$33.70||5.17%||4.85%||$11 957 820 597|
|10||STETH||Lido stETH predictions||93.6%||1||$2 941.39||-0.40%||-3.32%||$10 258 752 564|
|11||DOGE||Dogecoin predictions||88.4%||16||$0.060417||1.68%||2.72%||$8 015 516 955|
|12||DOT||Polkadot predictions||70.8%||55||$6.44||2.66%||0.22%||$7 223 798 979|
|13||DAI||Dai predictions||94%||1||$0.999736||0.02%||-0.07%||$6 861 849 280|
|14||MATIC||Polygon predictions||69.6%||62||$0.745555||3.08%||-0.82%||$6 511 915 521|
|15||WTRX||Wrapped TRON predictions||94.4%||5||$0.060062||1.88%||0.71%||$6 106 889 160|
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