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May 24, 2023

Bitcoin Slides on UK Inflation Data: Time to Buy Bitcoin?

May 24, 2023

Bitcoin, along with Ether and other major cryptocurrencies, slipped on Wednesday as the UK’s Consumer Prices Index (CPI) surged to 6.8% its highest level since 1992. 

The higher-than-expected inflation rate, coming in hot for the third month in a row, has prompted a broad downturn in the cryptocurrency market. 

Does this mean it’s time to buy Bitcoin before its next bullish phase?

Bitcoin’s performance continues to rest on inflation concerns

When inflation figures came in hotter than expected, Bitcoin slid under the psychological resistance level of $27,000. 

A loss of 2% was recorded in 24 hours, reversing the gains from earlier in the week. 

However, Bitcoin’s price consolidation around this mark has sparked speculation about an imminent breakout, which could present an excellent opportunity for investors looking to buy Bitcoin.

In this time of uncertain macroeconomic conditions, Bitcoin traders are on the lookout for potential triggers that could dictate the direction of Bitcoin’s price. 

The forthcoming announcement of the United States’ annualized GDP for Q1, coupled with data on US durable goods orders, could be potential market catalysts. 

Furthermore, ongoing discussions about the US debt ceiling, and a potential agreement on this issue, might influence Bitcoin’s future trajectory.

What is the potential for an imminent bull run?

Despite the recent decline, Bitcoin’s price stability could signify the calm before the storm – the storm being a potential bullish breakout. 

Comparisons are being drawn to early April when Bitcoin’s price ranged between $27,800 and $28,700 for 11 days before an 8% rally to $30,800 occurred in less than 24 hours. 

If the current 10-day sideways movement ends in a breakout, this could prove to be a golden opportunity to buy Bitcoin.

Bitcoin derivatives markets: a glimpse into the future?

The derivatives market is a useful tool to gauge market sentiment and forecast potential trends. Bitcoin futures markets display reduced demand from bulls with a 2% annualized premium, indicating a current lack of optimism. 

However, Bitcoin options pricing is balanced, reflecting an equal apprehension for both upside and downside movements.

Such balanced market sentiments often precede periods of extreme volatility. Although the market’s current sentiment leans neutral to bearish, an optimistic shift could be the trigger needed for Bitcoin’s next bull run. 

With an eye on key economic indicators and market triggers, and by taking advantage of the current downturn, you could position yourself advantageously before Bitcoin’s next bullish phase. 

As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making a major investment decision.

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