Bitcoin confirms bullish intentions, tests $31k: what to expect in the near term?

Bitcoin traditionally started the first trading day of the new week with a local decline, provoked by selling pressure in Asian markets due to discouraging macro statistics from China. However, in the second half of the day, with the opening of the American markets and statements from members of the Federal Reserve (Fed), Bitcoin managed to undergo another retest at $31k.

Financial markets froze in anticipation of tomorrow's inflation report. There are reasons to believe that the Consumer Price Index (CPI) report could have a positive impact on Bitcoin's price growth. In addition, other significant news with a positive sign has emerged in recent days, which explains the predictability of the bullish sentiment in the cryptocurrency market.

One of the key macro catalysts for yesterday's price growth in Bitcoin and stock indices were the statements from Fed members. San Francisco Federal Reserve Bank President Mary Daly and Atlanta Fed President Raphael Bostic noted the possibility of raising interest rates by two more steps in 2023. However, much will depend on the dynamics of inflation reduction.

Officials stated that cautious sentiments prevail among the members of the central bank regarding the next steps. Therefore, the question of a rate hike in July will largely be determined after the release of CPI data tomorrow, July 12. Investors and analysts expect a decrease in inflation from 4% to 3.1%, and if the forecasts are justified, the interest rate will not be raised.

The Fed's decision is significantly influenced by the deteriorating economic climate in the United States. The head of the U.S. Treasury stated that it is too early to exclude the risk of a recession, and the rating of U.S. stocks has been downgraded to "neutral." Additionally, an inversion of the U.S. federal funds rate curve has been observed for the first time since 1980, which has been characteristic of recession periods.

A key signal for the gradual completion of the aggressive monetary policy was the 39% increase in U.S. jobless claims. Such a significant rise in this indicator also indicates the likelihood of a recession due to the Fed's interest rate hikes.

Bitcoin is taking advantage of the current situation and using the moment for upward movement amid growing hopes for the completion of the Fed's aggressive policy. Investors also show faith in crypto assets, and CoinShares reports another inflow of funds into crypto funds amounting to $136 million in the past week.

In addition, the major commercial bank Standard Chartered has raised its forecast regarding the price growth of BTC in 2024. Analysts agree that Bitcoin will reach a level of $120,000. Investors also do not forget about the ETF application from BlackRock, which could bring $100 billion to $1 trillion into the cryptocurrency market if approved.

Bitcoin bulls confidently defend their positions near the support area of $29.8k–$30k. At the end of yesterday's trading day, Bitcoin made an upward leap to $31k, after which it retested the support level at $28.9k. Subsequently, the price recovered to the $30.5k level, indicating strong buyer positions and their desire to establish themselves above $30.5k–$30.8k for further movement towards $31k.

An impulsive retest of the support and resistance levels within a day indicates increased volatility. This week, we can expect the release of inflation and labor market data, so it is quite likely that the asset will break through the current range of fluctuations. In terms of a downward direction, the $28.8k level should be highlighted as crucial for the bears.

Buyers will continue consolidation and attempt to break through the $30.5k–$30.8k range in one impulse, followed by the $31k level. Analyzing the dynamics and prerequisites based on technical metrics does not make sense, as the cryptocurrency market is entering a period of high volatility, and price will be ruled by a ball of emotions and reactions to a greater extent.

Bitcoin maintains its bullish potential, and the immediate target for the asset is to establish itself above $31k. The success of the local upward trend in BTC depends on the Federal Reserve's decision, which, in turn, will rely on inflation data. Therefore, after the publication of the CPI tomorrow, the short-term prospects for BTC will become clear.