After weeks of consolidation, Bitcoin (BTC) and the broader cryptocurrency market staged a short-term rally in response to positive inflation data on Dec. 13.
The rally has seen Bitcoin set a fresh four-week high, with investors watching the asset’s price action towards a bottom that would likely start a new price breakout. Based on the flagship cryptocurrency’s recent price action, Kitco News analyst Jim Wycoff indicated on Dec. 13 that Bitcoin may have started a “bullish bullish breakout.”
According to Wycoff, bitcoin bulls have built a short-term technical advantage after a scramble of almost equal strength.
“Today’s price action has spawned the start of a bullish bullish ‘breakout’ from the choppy and sideways trading range on the daily bar chart, suggesting that an uptrend in price is about to develop. The bulls have gained the near-term technical advantage,” Wycoff said.
Bitcoin candlestick chart. Source: TradingView
Bitcoin positive reaction to CPI data
In fact, Bitcoin rallied after the latest Consumer Price Index (CPI) indicated that the Federal Reserve was taking significant steps to win the war to bring down inflation. The latest data showed that inflation was 7.1% yoy in November, compared to the forecast of 7.3%, while the monthly CPI was 0.1% lower than the 0.3% expected.
In this regard, the crypto market has been monitoring inflation data as it will determine the Fed’s next interest rate policy. Overall, high inflation weighed on bitcoin, with tighter monetary policy putting pressure on risky assets.
Bitcoin price analysis
At press time, Bitcoin was trading at $17,791 and posting daily gains of nearly 5% while weekly gains are at 4.5%.
Bitcoin seven-day price chart. Source: Finbold.
Bitcoin is looking forward to reclaiming the $18,000 zone, which has acted as a critical support level for the asset over the past few weeks. However, as inflation cools, Bitcoin’s ability to sustain gains will largely depend on the bull’s potential to overwhelm bears.
For the past few weeks, Bitcoin has been consolidating around the $17,000 mark. Specifically, if bitcoin fails to hold the $17,000 position, the asset is in line for a possible further correction.
Technical Bitcoin Analysis
Elsewhere, Bitcoin’s recent gains are reflected in the asset’s technical analysis. A summary of the daily readings on TradingView aligns with the ‘buy’ sentiment at 13, while moving averages also apply to buy at 9. Oscillators represent the “buy” sentiment at 4.
Technical Bitcoin Analysis. Source: TradingView
The reaction to the CPI data shows that Bitcoin has postponed the effects of possible criminal charges for the time being and has reservations about the crypto exchange Binance. At the same time, Bitcoin is gaining momentum following the arrest of FTX founder Sam Bankman-Fried.
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