Bitcoin Price Prediction Ahead of US Consumer Inflation Data

Key Insights

• Bitcoin price rose after the US published weak GDP data on Thursday.
• The data came a day after the Fed released minutes of the last meeting.
• The US will release the latest consumer inflation data on Friday.

Bitcoin’s price rose to $71,000 today, April 8, after the US released weak GDP data and the Federal Reserve minutes showed that some officials favored cutting interest rates. The coin will now be in focus as traders await US consumer inflation data tomorrow.

Bitcoin Price to React to US Consumer Inflation Report

The BTC price jumped after the Bureau of Economic Analysis (BEA) reported that the American economy grew at a slower pace than previously thought.

This report showed the GDP grew by 0.4% in the fourth quarter, lower than the first estimate of 0.7%. The growth was much lower than the 4.4% experienced in the third quarter.

One reason for the slowdown was the government shutdown that happened during the quarter as Republicans and Democrats differed on how to fund the government.

In theory, a low GDP report is seen as a bullish catalyst for Bitcoin because it may push the Federal Reserve to cut interest rates.

The BTC price also rose after the Fed released minutes of the last monetary policy meeting. These minutes revealed that some officials, especially Stephen Miran and Christopher Waller, preferred cutting interest rates because of the softness of the labor market.

Others, however, preferred maintaining a hawkish stance given the war’s impact on inflation. Officials opted to leave rates unchanged in that meeting and Polymarket traders expect that status quo will remain in the coming meetings.

The next important Bitcoin news will be the US consumer inflation report, which will provide more information about how prices jumped during the war.

Analysts estimate the headline Consumer Price Index (CPI) rose 3.3% in March from 2.4% in February. 30% of Polymarket traders see it coming above 3.4%.

Inflation jumped in March due to the US-Iran war, which pushed crude oil prices to their highest levels in years. Gasoline prices jumped to $4, pushing transportation costs much higher. Sticky US inflation will make it hard for the Federal Reserve to cut interest rates.

US-Iran Ceasefire and Falling ETF Demand

Bitcoin price will also react to the developments in the Middle East,where a fragile ceasefire started on Wednesday.

There are concerns that the ceasefire will not last for the full two weeks as the fighting in Lebanon is continuing. This explains why crude oil prices rose on Thursday, with Brent and other benchmarks nearing the $100 mark.

Fears of the war spreading also explain why American investors sold their Bitcoin ETF holdings. Data shows that the funds shed over $124 million on Wednesday, even after the launch of the Morgan Stanley spot Bitcoin ETF (MSBT).

Spot Bitcoin ETFs have now added just $22.9 million this month, a significant deceleration from last month’s gains of $1.3 billion.

At the same time, the crypto Fear and Greed Index has remained in the fear zone, which is reducing its demand.

BTC Price Prediction: Technical Analysis

The weekly timeframe chart shows that BTC price has slumped from a record high of $126,300 to $71,000 today. This retreat may continue in the near term as the coin has dropped below the 50-week Exponential Moving Average (EMA).

Bitcoin has also formed a large bearish pennant pattern and the two lines are nearing their confluence. A closer look shows that the coin is hovering near the 50% Fibonacci Retracement level, which is drawn by connecting the lowest level in 2022 and the all-time high.

As such, the most likely Bitcoin price forecast is bearish, with it potentially dropping to the psychological level of $60,000. If this happens, it may raise the possibility of it dropping to $50,000 this year.

However, a jump above the important resistance level at $80,000 will mean that there are buyers in the market who will be keen to push it higher to $100k

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