U.S. inflation data due later on Friday is expected to send ripples across markets, and could possibly break Bitcoin (BTC) out of its narrow trading range.
Bitcoin (BTC) is trading around $30,000- a level it has flitted around for over a month. While any attempts to break above $32,000 are met with resistance, traders also hesitate to let the token fall below $28,000.
But the U.S. consumer price index (CPI) reading for May could change this trend. Most of the BTC’s losses in 2022 are driven by fears of rising inflation, which is likely to spur rate hikes by the Federal Reserve.
Data from MarketWatch shows markets expect a reading of 8.1%, down slightly from 8.3% in April.
How will BTC react to the inflation data?
General consensus in the market is for two main scenarios for BTC. If the data comes in below expectations, it could trigger a relief rally for the token on signs that inflation is indeed cooling. BTC could likely break above its $32,000 ceiling in the short term.
But if the data comes in higher than expected, BTC stands to fall sharply. The Federal Reserve is likely to take a high reading as a signal to raise rates even further, prompting a risk-off sentiment.
Given that the knock-on effects of the Russia-Ukraine war are still being felt, traders may have to prepare for a higher-than-expected CPI. Downward pressure on BTC also suggests that losses in the token will be far greater than any gains in the near-term.
BTC had tumbled after April’s CPI reading, going as low as $26,000.
How low can Bitcoin go?
Technical indicators suggest that BTC is currently playing out a descending triangle pattern. The token is more prone to future losses than it is to gains.
Crypto analyst @MarkYusko paints a worst case scenario where the longer BTC spends in this pattern, the more likely it is to tumble to $15,000- down 50% from current levels.
The longer #Bitcoin stalls in this descending triangle bouncing around $30k, the greater the risk of a final puke to $15k
Such a crash would also place BTC down nearly 80% from a record high of $68,000 hit in November.
A poll opened by Yusko also sees a majority of 1000 respondents expecting a crash to $15,000.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.