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CPI Numbers Announced - Is Bitcoin Enthusiasm Back?

US Consumer Price Index (CPI) are out, triggering a surge in Bitcoin's price but is easing inflation enough to sustain BTC's upward price trajectory?

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After weeks of sleepwalking through stagnant activity with sporadic moments of intense excitement, Bitcoin has finally bounced back.

After a decline last week, the price of Bitcoin recovered this week to trading above $65,000, edging closer to $66,000.

On Wednesday, April's US Consumer Price Index (CPI) was released, revealing that CPI inflation rose 0.3% compared to 0.4% in February and March, and analysts' expectations of 0.4%. Core inflation fell to a 3.6% annual rate in April, marking the lowest level for this metric since March 2021.

Inflation easing helped to ease some of the market's concerns and the market responded positively to the news, with Bitcoin now up around 8.00% over the past five days.

After casting a cloud last week when Bitcoin registered its longest losing streak in a $500 billion decline in the crypt markets, many questioned if Bitcoin may have reached its peak.

Crypto assets were dampened by a combination of factors, including dwindling investment in US spot Bitcoin ETFs and the expectation that interest rates will remain high for an extended period of time.

The top token fell each day last week, marking the longest losing streak since October. The crypto market cap fell to about $2.4 trillion.

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The trend of net outflows from ETF funds is still at play, with this month's figure at about negative $170 million. This brings the net total flows into Bitcoin funds to nearly $12 billion since January.

Crypto ETFs launched in Hong Kong last week did nothing to lift spirits. However, contrasting with the extreme volatility seen with the launch of US ETFs, there are signs in the derivatives market that investors expect Bitcoin's extreme movements to level out as we advance.

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Gauges which measure the price swings based on options on the expected moves over the next 30 days for both Bitcoin and Ether were trading near two-month lows.

That is based on the BitVol (Bitcoin Volatility) and EthVol (Ethereum Volatility) Indexes, which measure expected 30-day implied volatility in BTC and ETH, respectively.

brn's BTC Take

Bitcoin’s implied volatility has decreased in recent weeks, with its current trading range between $58,000 and $64,000. The trend is downward, and a break below $58,000 could trigger a sell-off, particularly among ETF investors.

April’s US Consumer Price Index came in yesterday at 3.4%, as expected by investors. The market appreciated the news and BTC broke the $64K resistance level, reaching $66500. While investors are relieved to see a satisfying inflation number, potentially starting a positive trend, it remains much higher than the 2% the FED is aiming at. We believe a small correction will happen in the very short term as Bitcoin keeps building its way up new highs.