Welcome to another week of sideways action on Bitcoin or should I say another month?
Bitcoin has been moving in a tight range for the last 2 weeks of May and shifted to a narrowing wedge/triangle in June, most likely not getting out of it until Friday 10th and CPI data release, possibly even not until after FED monetary policy meetings on 15th.
As J Powell and his “friends” will be looking closely at CPI data and taking into account latest PCE inflation data, any major deviation either way from the consensus would result in a stronger move anticipating potential hawkish “vibe” 5 days later.
As companies tend to stock up on materials, partly due to rising cost and continuous supply chain issues (China only slowly getting back to normal), increasing energy prices, transport costs to name the few, we should really not expect inflation to go lower for a number of consecutive months. Considering “experts” have not been very good at calling inflation numbers in the recent months and what everyone by now experience when going shopping, we should not be surprised with another rise closer to 8.5% and no real drop for Core CPI.
That can create a decent trade opportunity to the short side (unless you are already in such trade) especially if Bitcoin might pop up closer to 31k again. Of course trading news is risky, but I think in this case we can make a decent educated guess and play with the dominant trend.
For less experienced traders I recommend sitting this out or just have your finger on the trigger and act after CPI data is released, assuming there is a clear bias, though worse case scenario I can see is Bitcoin staying within that range until 15th of June.
To finish this week’s short newsletter I think it is worth mentioning PayPal’s announcement to allow its users withdrawal of Bitcoin and Ethereum to external wallets (for now only in USA) as before they were only able to buy but not move. Among all the negativity around digital assets, as one expects during bear market, this is a welcoming news that big companies do not back out from their plans for crypto adoption. Read more.