With the crypto market at the mercy of ETF news, especially in regard to BlackRock, traders cannot really do too much in regard to predicting the timing of SEC news bites dropping.
However, what we do know is that CPI data is being released this coming week, and if we do see a substantial drop, as predicted by many economists, then cryptos will likely react positively.
The dynamic of falling inflation is unlikely to be a negative factor for crypto, given that it could mean less rates from the FED or even an end to them.
The market is currently pricing in a 93% certainty that a 25 basis point rate hike will come this month. But that's not the full story.
Markets are always forward-looking in nature, if we see a very strong decrease in annual CPI then a new narrative around no more FED rates in 2023 will quickly build after the July decision.
This week's data drop is expected to show Consumer prices rising by +0.2% M/M in June, while the annual measure is expected to pare back to 3.0% year-on-year from 4.0% in May. That's a big drop.
Core consumer prices are expected to rise 0.3% month-on-month, while the annual measure of core inflation is expected to slip to 5.0% year-on-year from 5.3% in May. Notably core inflation needs to really need to come in line to get all FED members onboard with no more hikes after July.
Credit Suisse says the easing core inflation would be welcome for the FED since it has been stuck around a monthly rate of 0.4% this year. The bank adds that this would be encouraging for the Fed after months of disappointment.
Overall, the continued hawkishness of the Federal Reserve has seen the slide in yields that came about as a result of these numbers reverses sharply.
With another rate rise almost certain this month this week’s CPI numbers won’t impact how the Federal Reserve is likely to act in 2 weeks’ time, but the numbers might shine a light on whether we can expect another rate hike in 2023.
Next week's CPI number could really get the freeway moving in terms of Bitcoin's sticky price range.
The Goldilocks scenario for Bitcoin to crack $31,200 without any fresh ETF news.
If a reduced CPI number can get BTC away from $30,000 and above $31,200 next week then Bitcoin looks to be all systems ahead of new SEC ETF news. Especially since I think the ETF will be approved.
Technically, the Ichimoku indicator is the superior price forecaster right now in my opinion.
Very simply, the top of the weekly cloud is the big breakout spot at $31,820. This remains the do-or-die level for BTC, meaning whether we see $33,000 or $28,500.
Sticking with Ichimoku analysis, a break above the weekly cloud sets up a test of the monthly cloud, at $33,000, as seen below. It would be strange for Bitcoin to come all this way without testing the bottom of the monthly cloud.
Bitcoin would be free of all Ichimoku Cloud resistance above $36,000, and the final resistance on the chart comes from the monthly conversion line at $42,000 (red line).
This does fall in line with all my other forms of technical analysis, and if we did get a positive ETF decision watch out for a quick shot at $36,000 and then some retracement before $42,000 gets tagged.
