Bitcoin (BTC) today maintained its position above the psychological $30,000 support level, with its price standing at $30,729. Market participants are holding their breath, eagerly awaiting the release of the U.S. inflation data.
This comes as the cryptocurrency records modest daily gains of 1%, part of a rebound that began on July 7 and has since seen the price of Bitcoin increase by nearly 3.75%.
Inflation data plays a pivotal role in determining the future trajectory of Bitcoin's price. A Bloomberg survey reveals that the majority of economists are expecting the headline and core inflation to continue moderating, which is a response to the hawkish policy from the Federal Reserve.
At its last meeting, the U.S. central bank made the decision to halt its hikes on interest rates. Jerome Powell, the Chair of the Federal Reserve, suggested that rate hikes might resume if the inflation data underwhelms. However, should the consumer price index (CPI) show a cooling trend, the Federal Reserve could potentially consider extending its pause, as per a report by Bloomberg.
Compounding these factors, the U.S. dollar index (DXY) is facing a tough period, having reached its lowest level since May. The index, which measures the dollar against a basket of top foreign currencies, dropped by 2.15% over four consecutive days. This downward trend indicates a dwindling appetite for safe havens among international investors.
In response, Bitcoin – often viewed as a risk-on asset – has likely benefited. The cryptocurrency has maintained a consistently negative correlation with the dollar throughout 2023.
In addition to these macroeconomic conditions, Bitcoin's market supply has been a factor in its price resilience. The cryptocurrency's supply on exchanges dropped to a five-year low on July 12. Market observers generally view a decrease in exchange supply as a bullish signal, as traders tend to withdraw BTC when they plan to hold onto the asset long-term.
On-chain data reveals that Bitcoin HODLers (holders) have been consistently acquiring coins throughout 2023, at a rate of nearly 27,000 BTC per month. This trend suggests that a significant number of Bitcoin investors are anticipating a price rally in the months to come.
From a technical standpoint, the BTC/USD pair has its sights set on the $31,000-31,500 range in July. This range aligns with Bitcoin's main resistance level, which forms part of a sideways consolidation channel. However, if a reversal were to occur now or following a test of this range, the Bitcoin price could potentially test the channel's lower trendline near $29,900 in July.
With all eyes on the Federal Reserve's upcoming rate decision on July 25-26, traders and investors alike are waiting for potential catalysts that could influence Bitcoin's future trajectory.
