Bitcoin (BTC) has seen a surge in buying since early March, with prices jumping from around $20,000 on March 11 to $28,216 at present. However, the upcoming release of the Consumer Price Index (CPI) data for March on April 12 may bring fresh volatility to the crypto market. Additionally, the Federal Reserve is set to release the minutes of its latest Federal Open Market Committee (FOMC) meeting, adding to the anticipation of market watchers.
While markets are eager to see a faster decline in inflation, their view seems to differ from that of the Federal Reserve. Even though market sentiment suggests that rate increases will be short-lived, the Federal Reserve remains hawkish.
According to data from CME Group’s FedWatch tool, the Fed is expected to repeat its 0.25% hike. Analyst James Choi believes that the upcoming CPI data will result in a three-month freefall for the US dollar, stating that “People seem to have no idea how the $USD $DXY will fall in the next 3 months.” Despite this, Bitcoin (BTC) may benefit from the volatility that could arise from the CPI data release.
How Bitcoin may respond to April’s CPI data?
In turbulent markets, volatility presents opportunities for traders to earn profits, and recent data suggest that Bitcoin is providing plenty of it. According to Kaiko, Bitcoin’s volatility is diverging from that of stocks, with the difference between Nasdaq’s 30-day rolling volatility and Bitcoin reaching its highest levels in a year amid the U.S. banking crisis.
Kaiko’s recent report indicates that the correlation between Bitcoin and gold is currently stronger than the correlation between Bitcoin and the S&P 500. Meanwhile, the inverse correlation between Bitcoin and the U.S. dollar is rapidly dissipating, which could result in a fall in BTC prices in the short term if the dollar loses its grip.
At present, Bitcoin is facing resistance at $28,733.52, while support is at $27,794.27. As the market continues to fluctuate, traders will be watching closely for opportunities to capitalize on the volatility.
