Bitcoin (BTC) experienced a significant surge on Thursday morning, surpassing the critical $26,000 support level. This rally coincided with the release of the US consumer price index (CPI) on Wednesday, which revealed an acceleration in the annual inflation rate for August.
Given the concerns surrounding rising inflation, Bitcoin appears to be in a unique position to navigate this uncertain economic landscape.
Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, believes that Bitcoin could thrive in an environment of rising interest rates.
Bitcoin’s Potential Amid Rising Interest Rates
McGlone’s assessment is based on BTC’s 20-week moving average, which he suggests may have broader implications for all risk assets, including traditional equities. He highlights that the performance of Bitcoin could serve as an indicator of future market liquidity and speculative trends.
Bitcoin, Pioneering 24/7-Traded Indicator, May Be Leading Lower – There’s never been a more widely 24/7-traded liquid asset than #Bitcoin that has appreciated as much and is no one’s project or liability. That it came of age during an unprecedented period of zero-interest rates…
— Mike McGlone (@mikemcglone11) September 13, 2023
McGlone points out that the Federal Funds Futures One-Year (FF13) rate currently stands above 5%, indicating limited prospects for liquidity easing from the Federal Reserve. He draws parallels to Bitcoin’s behavior at the start of 2022 and notes that the cryptocurrency aligns with futures pricing for the current tightening cycle.
However, he also cautions that the rapid ascent of the federal funds rate from zero to 5.25% could pose challenges to all risk assets, including Bitcoin.
BTC Price And Technical Challenges
According to the latest data from CoinGecko, BTC is currently trading at $26,258 with a 24-hour gain of 1.3% and a seven-day rise of 1.8%. Despite reclaiming the critical $26,000 level, some observers note that Bitcoin’s momentum has shown signs of weakening. Keith Alan, co-founder of monitoring resource Material Indicators, tweeted that its strength is still sufficient to retain most of the gains made after the recent bounce.
However, Bitcoin faces several technical resistances. Among them is the ominous “death cross,” where the token’s 50-day moving average crosses below its 200-day moving average. Additionally, there is a formidable 100-day moving average at $28,292, marking the upper boundary of the current price range, according to Alan.
Bitcoin’s recent price movement above $26,000 has garnered attention in the context of rising inflation concerns and the potential impact of higher interest rates on the broader financial markets.
While Bitcoin’s unique position as a digital asset and store of value is being closely watched, it still faces technical challenges that could influence its future price trajectory. Investors and analysts alike will continue to monitor these developments as the cryptocurrency market navigates the evolving economic landscape.
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