Bitcoin: Will upward movement resume ahead of May inflation report?

Bitcoin has been under the control of bears, updating local lows for the past two weeks. At one point, the price of the asset reached $25.3k, not far from the base of the upward trend. Meanwhile, BTC investors actively accumulated the cryptocurrency, and the number of unique addresses in the Bitcoin network sharply increased in the last five days.

Simultaneously, we are approaching a week of macroeconomic news that can significantly affect the global economy. Crypto investors are also closely monitoring macro data, so we can already expect the first price reactions of key market assets today.

The U.S. inflation data will be released today, and market expectations regarding this event are highly positive. Investors anticipate a decrease in year-on-year inflation to 4.1% in May from 4.9% in April. If these forecasts are met, June can be called a turning point month in the crisis that began in 2022.

If deflationary movement in May reaches -0.8%, it can be stated with almost one hundred percent certainty that there will be a pause in the interest rate hike by the Federal Reserve. This, in turn, will instill hope in the markets and trigger a local bullish trend that will also affect cryptocurrencies. It also signifies a significant increase in liquidity volumes in financial markets and the recovery of the global economy.

Since 2022, Bitcoin has shown a high level of dependence on CPI data and Fed policy. A pause in rate hikes and a strong deflationary move could increase interest in high-risk assets, but that will happen in the medium term.

In the short-term perspective, positive data on the inflation level in the U.S. can trigger an impulsive price movement. The key target for bulls will be to consolidate above the $26.6k level and return to the price range of $26.6k–$27.5k. Subsequently, this will help BTC develop an upward movement towards $28k.

It is also important to note that the short-term prospects of Bitcoin will become clear as the upward impulse develops. If we observe increasing volumes at the midpoint of the upward surge, it will serve as a bullish signal, indicating the prospects of a bullish movement already in the medium-term perspective.

The $26.6k level is a key target for bulls if the upward impulse is properly executed. In addition to returning to the $26.6k–$27.5k range, an important reason for breaking through this level is the presence of a downward trendline that originates from the price peak at $31k in mid-April.

Therefore, the upward movement and consolidation of BTC above $26.6k, and further movement towards $27k, will change the medium-term trend to bullish. As of 08:00 UTC, we observe a slight increase in volatility and on-chain metrics. Technical indicators show increasing buying volumes, indicating positive market expectations.

The $26.6k level is a key target for bulls in the short-term perspective. A successful breakthrough of this threshold will change the medium-term outlook in the crypto market and allow bulls to take the initiative. However, this can only happen in the case of a strong deflationary movement.