•The Bitcoin price hit a three-month high at $19,104.
•The market reacted cautiously to the announcement of December 2022’s Consumer Price Index (CPI) of 6.5%, but the bulls took over after that.
•Experts are currently recommending various data points, such as the Fed’s FOMC meeting and Fundstrat Global Advisors analysis, to assess if the price increase is a bull trap or a new bull market.
Yesterday, the Bitcoin price hit a three-month high of $19,104, following the announcement of the Consumer Price Index (CPI) for December 2022. The initial reaction of the market was one of caution, with the price dropping below $17,900. However, after some time, the bulls took over and posted the biggest daily candle in over 6 months.
At the moment, experts are paying close attention to the possible reasons behind the increase in price and are recommending that investors assess if this is a bull trap or really the beginning of a new bull run. To do this, they are encouraging investors to take into account various data points.
One such data point is the Fed’s upcoming FOMC meeting, which is scheduled for February 1. According to the FEDWatch tool, a whopping 94% of experts expect the Fed to continue to scale back its rate hike pace and only add 25 bps.
In addition, Fundstrat Global Advisors, an investment firm, is pointing to a further analysis which shows that 59% of CPI components are now in outright deflation. This analysis is being taken as an indication that inflation has significantly slowed in recent months. This, in turn, is leading the firm to conclude that the bond market has correctly predicted the current inflation rate and the Fed’s view of it.
Finally, the firm is also looking at the latest Atlanta Fed wage tracker. Year-over-year, the reading fell to 5.5% in December, which is the lowest level since January 2022. This, according to Fundstrat, is another data point confirming that wage inflation has slowed sharply in recent months.
All in all, the Bitcoin price has increased significantly in the past few days and experts are looking carefully at the various data points to assess if this is a bull trap or a true sign of a new bull market. Only time will tell.