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Bitcoin is trading higher as investors digest the US inflation data released on Thursday. According to the US Department of Labor, consumer prices rose to a 13-year high at 5.0% in May on a year-on-year basis. The figure is higher than the forecasted 4.7% and the prior month’s 4.2%. At the same time, core CPI came in at its highest level since January 1992.
The Fed’s narrative that the inflationary pressures are transitory has lowered investors’ expectations that the bank may hike interest rates sooner than expected. Subsequently, the environment has boosted bitcoin price. Usually, low interest rates create a bullish environment for riskier financial assets such as cryptocurrencies.
Bitcoin is on a rebound after reversing its gains in the previous session. The prior decline was a knee-jerk reaction to the higher-than-expected US inflation numbers. At the time of writing, it is up by 2.22% at 37,508.50. After plunging to 31,000 on Tuesday, it has since surged by about 20.88%. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages.
I expect the crypto to surge higher to 38,000, where it is likely to experience resistance. On the flip side, it may drop to find support along the 25-day EMA at 36,487. Below that level, the next support level will be along the 50-day EMA at 36,000.
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