Deciphering the Digits

In a financial world where every decimal counts, today’s markets seem unfazed, displaying a calm stance amidst an onslaught of economic news. On the one hand, Bitcoin has taken impressive leaps in recent days, echoing trader sentiment as they navigate through a somewhat mixed U.S. inflation report. With the headline Consumer Price Index (CPI) ticking up by 3.7% YoY in August—barely overshooting predictions by a tenth of a percentage point—the narrative is complex. And while the core CPI, stripped of the often volatile food and energy prices, rose by 4.3%, it did so right in line with the anticipated figure. Despite the nuances within the CPI data, market consensus indicates diminishing expectations for further monetary tightening. In fact, the odds of the Fed raising rates in the upcoming week have been reduced down to 3% following the recent CPI release with a pause now being seen as the most likely outcome. An important point to note here is the inherent “Lag Effect” theory on interest rates and recessions. Contrary to widespread assumptions, recessions do not tend to trigger simultaneously with the Federal Reserve’s rate hikes. The real turning point is when rate cuts begin, an event that is still on the horizon.

In other news, FTX, currently a dominant player in the crypto sphere, has recently submitted an updated proposal to the bankruptcy court, primarily aiming to define new guidelines for selling and transferring digital assets. This move marks a significant phase for FTX, as approval to liquidate assets reclaimed post-crash may soon materialise. For traders, this is crucial to observe as it may introduce heightened selling pressure in the ensuing weeks.

From a technical standpoint, Bitcoin has recently managed to close a daily candle above the $26.2K resistance, a level it struggled to surpass in recent weeks. Maintaining daily closes above this mark is crucial, as falling below could potentially lead to a drop towards the $25K demand zone. Notably, the MACD has maintained a bullish trend over the past few weeks, which might pave the way towards the next key resistance levels at $26.6K and $28.2K.

Check out the chart on TradingView here.