Bitcoin recovers from the $ 33,000 support as US dollar inflation returns in focus

Bitcoin (BTC) price stabilized Tuesday after ending the previous session with a 3.41% loss, aided by weaker dollar sentiment ahead of the major US inflation report later in the day.

The BTC / USD spot rate rose a modest 1.31% to $ 33,096 after bottoming out at $ 32,996 on Monday on the Coinbase exchange. CME Bitcoin futures are up 1.64% from the previous session low of $ 32,600.

Meanwhile, the US dollar index lost about 0.03% before the opening bell in London. This index shows the strength of the greenback against a basket of leading currencies.

Wait for inflation data

Bitcoin and the dollar traded in opposite directions during the week of the top inflation reports and the key messages from US Federal Reserve Chairman Jerome Powell from Congress.

On Tuesday, the US consumer price index (CPI) is expected to see another sharp rise in June, showing rising inflation as the economy tries to recover from the Great Depression. A Reuters poll of economists found the CPI could be up 0.5% from May and 4.9% year over year.

Many traders are betting on Bitcoin against the prospect of higher inflation, in part because popular stories predict that the leading cryptocurrency will affect the purchasing power of fiat currencies as a hedge against central banks’ inflationary policies.

Inflation is killing your savings account.

Power supply. #Bitcoin

– David Gokhshtein (@davidgokhshtein) July 11, 2021

Specifically, the US Federal Reserve has been running a monthly asset purchase program of $ 120 billion since March 2020. As a result, US Federal Reserve policy has doubled its total assets to more than $ 8 trillion. In the same time, Bitcoin has grown up to 1,528% – from $ 3,858 to nearly $ 65,000.

The cryptocurrency has more than halved since its peak in mid-April, but has maintained its overall bullish bias by tirelessly holding $ 30,000 as a psychological floor price. The support came in handy after two previous CPI reports showed inflation rose to 4.2% in April and 4.9% in May.

Gustavo De La Torre, director of business development at N.exchange, said: “The rise in the CPI is a sign that the economy has not yet fully recovered from the pandemic and that the crypto market is driving negative inflation numbers,” said Cointelegraph. He added that the lower Bitcoin price combined with a mixed economic outlook will encourage more investors to accumulate the cryptocurrency.

De La Torre added, “If the buying spurt picks up, bitcoin prices of up to $ 40,000 could be reached in the short term.”

In addition, CEX.IO’s Konstantin Anissimov warned of a possible restrictive reaction from the Fed to further inflation, noting that this could lead the central bank to relax its bond-buying program and cut rates earlier than expected.

“As things have gone, the Federal Reserve has increased its balance sheet to more than $ 8 trillion since early 2020 – a significant increase,” Anissimov said, adding that the cash price of lower electronics will continue to act as a suitable hedge against inflation fears for the time being. He further stated:

“Both Bitcoin and Ethereum with new buybacks are likely to retest new price levels of $ 45,000 and $ 3,000, respectively.”

Bitcoin goes into accumulation

On-chain indicators continue to point to continued bitcoin accumulation. According to Glassnode data, companies with low sales histories continued to pile up bitcoin from the weaker ones until the end of last week, while net AC power fell to negative levels, suggesting that traders were withdrawing their bitcoins from trading platforms in order to hold them.

“Retail has been buying heavily for weeks, but we finally have the bullish momentum we’ve been waiting for,” said Will Clemente, an independent market analyst.

“This week, 17 new whales were born on the blockchain, and the total number of whale populations has risen to 65,429 BTC.”