Data from Cointelegraph Markets Pro and TradingView showed BTC/USD rebounding from lows sparked by a new 40-year spike in US inflation according to the Consumer Price Index (CPI).
After dropping briefly below $19,000, the pair made a journey above $20,000 before consolidating just below this psychologically important level.
As for the material indicators of the on-chain analytics resource, it is now a do or die for BTC price action when it hit a major uptrend line in place since mid-June.
On the day, this trend line reached around $19,600, with BTC/USD now holding it as support.
Meanwhile, big gains seemed less likely for the cryptocurrency markets thanks to the day the US dollar once again ruled.
After dropping in the wake of the CPI print, the US Dollar Index (DXY) returned with a vengeance to hit its highest levels since 2002 – a phenomenon that marked most of the year.
The new peak was measured at 108.64, an increase of more than 1% versus 24-hour lows.
US Dollar Index (DXY) candlestick chart. Source: TradingView
In addition to the short-term negative impact on bitcoin and risk assets, the strength of the US dollar was also bad news for other major global currencies, with the Japanese yen in particular focus for bitcoin commentators.
“The yen is taking a beating again today. The Bank of Japan froze, waiting for the Fed to reverse. Until then, they will continue to destroy their currency because they have no other choice,” famous Twitter account Stack Hodler argued that day:
“BoJ + Yen is a glimpse into the future of the ECB + the Euro. Do you see why Bitcoin matters so far?”
As Cointelegraph reported, some believe the Fed will also have no choice but to halt the inflation-busting interest rate hike at the end of 2022.
“In response to today’s CPI showing broad-based and accelerating inflation, short-term FF futures moved higher meaning FF peaked at 3.68% by 12/22 with Federal Reserve immediately afterwards holding the price cut to 2.9% by 1/24,” the investor wrote. And hedge fund manager Bill Ackman, in a thread on Twitter in response to the CPI data:
“The market tacitly expects the bolder Fed to push us into recession by the end of the year and then cut rates in response.”
A little faith in the rebirth of the altcoin
Turning to altcoins, one analyst warned that the steady progress over the past 24 hours was no reason to assume that prices could not fall further.
Related: How Bitcoin’s Strong Correlation With Stocks Could Lead to a Drop to $8000
In new updates today, Il Capo of Crypto predicted downside moves for at least two tokens in the top ten cryptocurrencies by market capitalization.
Ether (ETH), for example, was threatening to return to the three-digit price tag.
Cardano (ADA) faced an even worse situation after falling through the support, which was tested six times in as many weeks.
He commented, “It broke the support and is now testing as resistance. Very bearish.”
However, data from research firm Santiment highlights the possibility of a possible rebound for an altcoin, which has “fallen stronger than most” this year.