Bitcoin Price Bulls Ratify Rally $40k Week Bolstered US CPI Data

Bitcoin price falls after US CPI data, but support at $36,000 could launch gains above $38,000 and $40,000, making it bullish.

Bitcoin (BTC) experienced some ups and downs in its price on Tuesday, following the release of the October Consumer Price Index (CPI) report by the United States Bureau of Labor Statistics (BLS). The report indicated that inflation in the country is continuing to ease, coming in at 3.2% against the market's expectation of 3.3%, and down from September's 3.7%.

The Core CPI, which measures inflation excluding the volatile prices of food and energy, increased by 4% on a yearly basis, slightly lower than the economists' anticipation of 4.1%. While the CPI remained unchanged on a monthly basis, there was a 0.2% increase in the Core CPI over the same period.

The BLS press release highlighted that the index for shelter continued to rise in October, offsetting a decline in the gasoline index, resulting in the seasonally adjusted index remaining unchanged over the month. Additionally, the energy index fell by 2.5% over the month, with a 5.0% decline in the gasoline index offsetting increases in other energy component indexes.

Despite a brief drop in BTC price following the release of the CPI data, it is expected that the correction will be short-lived. The dip from Monday's highs, just above $37,000, to the current trading price of $32,270, could pave the way for a fresh sweep through liquidity, leading to a larger breakout past $40,000.

The support provided by the buyer congestion at $36,000, along with the middle boundary of the ascending trendline, is expected to limit downward price movement. Traders seeking long positions in Bitcoin can take comfort in the Moving Average Convergence Divergence (MACD) indicator, which shows a clear buy signal on the weekly timeframe.

The momentum supporting the ongoing general uptrend is likely to increase as long as the MACD continues to move higher above the neutral area, with green histograms reinforcing the bullish thesis. However, it is important to note that bullish markets also experience retracements, which are essential for the continuation of the uptrend by providing new entry opportunities and allowing other traders or investors to lock in gains.

Whales have been observed offloading their Bitcoin wallets, with large-volume holders either selling or redistributing around 60,000 BTC over the past week, worth roughly $2.22 billion. This activity could explain the lack of momentum Bitcoin price is facing above $37,000.

Traders should keep key levels in mind and observe how BTC price reacts to them. Trading above resistance at $38,000 could fuel the anticipated breakout beyond $40,000 and towards $50,000, while a drop below $36,000 could lead to a larger sell-off, with support levels at $35,000 and $33,000 coming into play.

With a bullish cross on the weekly chart almost complete, it is unlikely that Bitcoin price will drop to $33,000. This bullish cross is evident as the 50-week Exponential Moving Average (EMA) (red) moves above the 100-week EMA (blue), indicating potential for further upward movement in the price of Bitcoin.