We've been through 2 dramatic weeks in the cryptocurrency market. Last week, after Elon Musk announced that Tesla had suspended to accept BTC as a payment method, BTC broke its major support of $55,000 and quickly fell over 15%. Today, Elon Musk once again tweeted that“Bitcoin is actually highly centralized, with supermajority controlled by handful of big mining (aka hashing) companies", but later clarified that "Tesla has not sold any Bitcoin", BTC price declined 20% and reached as low as $42185, and now bounce back around $44,800.
Bitcoin Skyrocket - Federal says it should be in no hurry to talk QE taper.
The annual inflation rate in the US soared to 4.2% in April of 2021 from 2.6% in March and well above market forecasts of 3.6%. It is the highest reading since September of 2008, amid a surge in demand as the economy reopens, soaring commodity prices, supply constraints.
The notion that the Fed will begin to withdraw some liquidity this year suffered a serious blow last week after the latest US employment report fell short of expectations. The numbers showed that the US economy is not doing quite as great as most investors believed given the landslide of federal spending, vindicating the Fed's own view that there’s still a long way to go until the labor market recovers fully. It's not the healthy demand-driven inflation the Fed wants to see, so policymakers believe it will fade before long.
Bitcoin is also identified as a hedge to inflation. If inflation induced a recession, for example, investors might rush into cryptocurrency market. Bitcoin's strongest advocates see its rising price as an early-warning sign that the traditional financial system is vulnerable, and argue that the cryptocurrency could rise further as investors look for a haven. Such arguments hinge on the idea that inflation won’t just edge up with a growing economy, but could explode as a result of so-called money printing.
BTC Technical Analysis
From the daily chart, BTC has broken a mid-term trend line that has been held for nearly 3 months. However, after tested the support of $45,000 and bounced back from it, which indicated that bulls are showing power, the short-term growth may occur in the next week. If that happens, the nearest resistance at $53,500 might be tested shortly. Looking at the Stochastic RSI, we can see that strength has reset to oversold levels. The regular RSI also confirms a small bullish upswing as it has printed a bullish divergence.