The crypto markets are in for an exciting week. The Bitcoin and crypto markets finished the week strongly. Bitcoin’s price climbed straight to the current key resistance level of $28,600. The DeFi ecosystem begins the week on a strong note, with bulls driving BTC to a new 10-month high weekly close.
Crypto markets ahead of the CPI data
After a relatively tranquil week, last-minute volatility has traders excited about the possibility of a second attack on the $30,000 resistance. However, many obstacles stand in the way. In what is expected to be a significant week for macroeconomic data releases, the Consumer Price Index (CPI) for March and new Federal Reserve policy insights are due on April 12.
Investors will be assessing whether the Federal Reserve can push through another rate hike or whether it will pause in the face of stronger-than-expected falling inflation and the most recent US labor market data. The previous month’s CPI was 6.0% year on year (YoY) and 0.4% month on month. (MoM).
With the Ethereum Shanghai upgrade, this is a recipe for volatility. What will Bitcoin do? According to the data, volatility correlations between the largest crypto and traditional risk assets are inverting. However, sentiment data indicates that the hodler base has little appetite for sudden selling.
CPI leads the week’s key macroeconomic data
In March, analysts anticipate CPI YoY of 5.2% and 0.2%. (MoM). A failure to meet expectations is likely to result in a decline in the price of Bitcoin as markets price in a greater likelihood of another Fed rate hike in May. The CME’s FedWatch tool currently indicates a 61% chance of a rate hike of 0.25% in May. If expectations are met or exceeded, Bitcoin’s price is likely to rise.
At 2:00 p.m. Eastern Standard Time (EST) on Wednesday, the FOMC minutes will be released. The meeting minutes will provide additional information regarding the Fed’s projections and considerations for the most recent interest rate decision. Wednesday is therefore the most important day of the week.
At 8:30 a.m. EST on Thursday, April 13, the US Producer Price Index (PPI) and initial jobless claims will be released. The PPI MoM is anticipated to reach 0.0% (previously -0.1%), while the core PPI MoM is anticipated to increase to 0.3% (previously 0.0%).
Bitcoin’s price volatility follows up
Data suggests that if traders want crypto volatility, they may already have it in abundance. According to the market data resource Kaiko, Bitcoin’s volatility is diverging from that of equities, increasing while the Nasdaq cools.
Last month’s events, centered on the escalating U.S. banking crisis, were sufficient to cause the “gap” between Bitcoin and Nasdaq 30-day rolling volatility to reach its highest levels in a year.
According to market data, the price of Bitcoin has been confined to a narrow range between $30,000 and $27,000 since March 21. In the past three weeks, Bitcoin has essentially traded sideways, but the crypto market has not seen an increase in open interest.
Ethereum Shanghai upgrade expected within the week
BTC may experience an internal source of friction this week as Ethereum prepares to undergo its Shanghai hard fork, coinciding with Bitcoin’s return to market dominance. The upgrade will unlock and make available for sale approximately $2 billion worth of ETH.
Analysts are traditionally divided over the potential intensity of the resulting sell-side pressure, with some analysts arguing that there will be few incentives for market holders to sell.
While ETH/USD recently reached its highest levels since August and attempted to surpass $2,000, ETH/BTC is struggling to recover from its lowest levels in ten months.
Crypto greed levels
Even though crypto market sentiment is at its most “greedy” level since the BTC/USD all-time highs in November 2021, there are some encouraging signals from hodlers.
These are the findings of the research firm Santiment, which over the weekend identified an ongoing trend that echoes the behavior of Bitcoin holders earlier in the year when the crypto’s price was headed into uncharted territory.
During the first quarter of 2021, crypto market “greed” was significantly more intense, with the Crypto Fear & Greed Index spending the majority of the time near its maximum levels — traditionally a signal that a market correction is imminent.
BTC and USD shaky correlation
Globally, there has been a loss of interest in the dependence and dominance of the United States Dollar. In recent years, Bitcoin has gained significant attention as a decentralized digital asset that operates on a peer-to-peer network. One of the notable aspects of Bitcoin’s performance has been its correlation with the USD.
Traditionally, Bitcoin has exhibited a strong correlation with the USD, with its value often rising or falling in tandem with the movements of the world’s most widely used fiat currency. However, in recent times, there has been a notable shift in this correlation, as Bitcoin has started to lose its previously strong link to the USD.
This phenomenon has raised eyebrows among investors, analysts, and crypto enthusiasts alike, as it indicates a potential shift in Bitcoin’s behavior and the evolving dynamics of the crypto market.
