The cryptocurrency markets experienced a surge yesterday following the release of lower-than-expected U.S. inflation data, which sparked renewed buying sentiment. Bitcoin, in particular, soared past $66,000 for the first time since April 24 and recorded a 6% increase within the past 24 hours. As the market recovers from its recent low, there is anticipation of a potential surge in altcoin prices. Analysts believe that Bitcoin’s recent breakout has revived market confidence, leading investors to shift their focus towards altcoins.
The rally in Bitcoin followed the publication of April’s U.S. Consumer Price Index (CPI) figures, which showed a slight decrease compared to March, coupled with a relatively weak retail sales report. This data provided relief to investors who were concerned that rising inflation and an overheated economy might prompt the Federal Reserve to reverse its dovish stance and consider raising interest rates.
Bitfinex analysts stated in a market update that investors view this as a bullish regime shift since it marks the first decrease in CPI inflation over the past three months. They also noted that the Federal Reserve’s earlier announcement of its plan to taper the central bank’s balance sheet run-off is seen as a positive development for risk assets.
Within the last 24 hours, the Bitcoin market witnessed a surge in total liquidation, nearing $60 million as of now. The majority of liquidated positions were bearish, surpassing $48 million.
Crypto trading firm QCP Capital predicts that Bitcoin (BTC) is likely to rally back to $74,000 in the coming weeks, approaching its all-time high reached in March. They attribute this expected bullish momentum to macroeconomic developments in the U.S., including a gradual decline in inflation and subsequent interest rate cuts, which are expected to support risk assets. QCP Capital analysts have observed significant buyers for Bitcoin calls with strike prices of $100,000 to $120,000 for December 2024, indicating confidence in recent price gains.
Furthermore, institutional demand for Bitcoin is on the rise, with large asset managers such as Millennium and Schonfeld investing 3% and 2% of their Assets Under Management (AUM) into the Bitcoin Spot ETF.
Analysts also note that Bitcoin’s price breakout aligns with increasing sovereign and institutional adoption ahead of the upcoming U.S. elections. The firm speculates that this could potentially signal the resumption of the bull market.
As BTC price continues to rise, there is a possibility of a comeback in altcoin dominance during a minor pullback in Bitcoin. This could strengthen the buying sentiment in the market. Analyst Michaël van de Poppe predicts a resurgence in altcoin sentiment, with BTC price finding strong support around $60,500.
Looking ahead, Bitcoin has surpassed the 20-day exponential moving average ($63,379) on May 16, indicating that buyers have taken control. The price has been surging in recent hours and is aiming to break the $70,000 barrier. Currently, BTC price is trading at $66,268, representing a surge of over 6.5% in the last 24 hours.
If this momentum continues and the price surpasses the immediate resistance line at $67,232, it could potentially lead to a rise towards the strong resistance level at $73,777. However, sellers are expected to put up a strong defense at this level.
To prevent further upward movement, sellers need to protect the $67,000 level and push the price back to the $60,000 support. Buyers are anticipated to vigorously defend this support. If this level fails, the BTC/USDT pair might drop to the 61.8% Fibonacci retracement level at $56,600.
