Bitcoin Is Waiting for the Next Inflation Data. CPI Could Accelerate Crypto Key Recovery.

Bitcoin and other cryptocurrencies were little changed on Wednesday ahead of the publication of US next inflation data, which has the ability to either rocket digital assets back above important levels or usher in the latest leg downhill.

Bitcoin has traded at $27,600 in the last 24 hours, with the largest digital currency remaining below the psychologically key $30,000 mark as well as other critical technical milestones. Bitcoin recaptured $30,000 in April for the first time since June of last year, when the crypto selloff intensified into a devastating bear market, but has since struggled to consolidate gains above that level.

“Bitcoin is trading around $27,600, remaining near the lows of the last two months and below the 50-day moving average. The bulls can’t gain more than a pause in the slide, but the market has yet to return to the upside,” said Alex Kuptsikevich, an analyst at broker FxPro. “Moving out of the $27,000 to $28,500  range can start a broader move towards a breakout with targets at $25,000 and $30,000, respectively.”

On Wednesday, digital assets were performing similarly to the stock market, with the Dow Jones Industrial Average and S&P 500 positioned to begin around or below flat as investors anticipated the publication of the April consumer price index (CPI) in the United States.

Cryptocurrencies remain vulnerable to macroeconomic factors, particularly the course of US interest rates because higher rates discourage demand for riskier assets such as Bitcoin. The Fed has rapidly raised interest rates over the last year in an attempt to curb decades-high inflation. While markets expected the Fed to deliver its final rate hike last week, the Fed has indicated that it would continue to examine economic data.

FactSet polled economists estimate CPI to have increased 5% year on year in April, maintaining price increases from March, with core CPI — which excludes volatile food and energy costs — rising 5.4% year on year, down from 5.6% in March in next inflation data. Investors want to see strong evidence of disinflation, which should bolster the notion that the Fed is done raising interest rates. An increase in inflation, on the other hand, may alarm investors and lead to a decrease in risk assets such as Bitcoin.

Beyond Bitcoin, the second-largest cryptocurrency, Ether, was unchanged at around $1,850. Smaller cryptos or altcoins performed worse, with Cardano falling 1% and Polygon falling 2%. Memecoins performed better, with Dogecoin and Shiba Inu both rising by around 1%.