It rose to $17,000 on November 15 on Wall Street as fresh US economic data continued to show slowing inflation.
BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView
A ‘good’ PPI boosts risky assets
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it neared multi-day highs.
Volatility returned an hour before the open as US PPI came in below expectations.
Core PPI remained unchanged on a monthly basis, with PPI overall rising 0.2% versus expectations of 0.4%. YoY PPI was 8% vs. 8.3% expected.
The data, which is already in stark contrast to last month’s PPI, comes after last week’s October Consumer Price Index (CPI) reading, which also shows that price increases in the US have been slowing.
An ostensibly good sign for cryptocurrencies alongside risky assets, the lower numbers theoretically increase the possibility of an earlier pivot in hawkish economic policy from the Federal Reserve.
Michael van de Poppe, founder and CEO of trading firm Eight, reacts: “Good CPI & Good PPI.”
Others were more skeptical of the results in light of the stringent quantitative tightening (QT) procedures.
“The producer price index is the inflation number that the Fed uses to make decisions,” famous analyst Venturefounder wrote in a segment of his Twitter analysis.
“Market rallies on the news, inflation may have peaked but I think the most worrying part after the benchmark QT for almost a year is still PPI at 8%.”
US producer price index (PPI) chart. Source: Bureau of Labor Statistics
Stocks naturally appreciate recent economic changes, with the S&P 500 and Nasdaq Composite up 1.7% and 2.4%, respectively, at the open.
Meanwhile, the already unstable US Dollar Index (DXY) felt the pressure, falling briefly below 105.5 to its lowest since mid-August.
US Dollar Index (DXY) chart in the form of a one-day candle. Source: TradingView
Bullish divergences meet the risk of ‘final capitulation’
For Bitcoin, optimism has been hard to find in analytical circles.
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However, for trader and analyst Seth, the fresh bullish divergence on the weekly chart was cause for confidence.
Bears get credit for FTX Blackswan. Not many knew that the second largest stock exchange was on its way to bankruptcy! the accompanying Twitter comments stated.
The darker news came from fellow analyst Matthew Hyland, whose earlier warning of a bearish chart cross came true.
“The two previous crosses resulted in moves at -46% and -57% after the cross was confirmed,” repeated about the Moving Average Convergence/Divergence (MACD) indicator on the three-day chart.
Annotated BTC/USD chart. Source: Matthew Hyland / Twitter
Meanwhile, Crypto’s Il Capo, still eyeing a deeper macro drop, added that “final capitulation is likely.”