Bitcoin price has seen an increase in volatility after the release of the US Consumer Price Index (CPI) on Thursday. The initial drop in BTC price was later taken over by buyers, resulting in a sharp upward move. CPI came out at 8.2 percent, above the 8.1 percent forecast. So, what will happen in the next period? Here is the Bitcoin forecast and analysis by analyst Akash Girimath…
Bitcoin forecast: Correlation with stock market continues, what will be the result?
As Cryptokoin.com reported, after the CPI announcement, the price of Bitcoin fell to $ 18,190. However, BTC price quickly recovered and rallied as high as $19,500. Going forward, news affecting the stock market will also affect cryptos, according to the analyst. Because the tight correlation between the two continues. However, there is an interesting development that signals the beginning of an uptrend, at least in the short term.
Bitcoin price was already correlated with the stock market with a correlation coefficient ranging from 0.1 to 0.7 by November 2021. But since 2022, the correlation has strengthened with the figure staying at 0.90 or above for a longer period of time. Another interesting observation is that there have been four significant drops in the correlation in the last four months, two of which coincide with the CPI announcements. For example, on July 13, the CPI came in at 9.1 percent, higher than 8.8 percent. After that, the correlation dropped from 0.88 to 0.16.
Bitcoin likely to rise if history repeats itself
On October 13, after the CPI announcement, the correlation dropped from 0.75 to 0.31. That is, it was 0.1 percent higher than the expected 8.1 percent. Both declines coincide with the higher-than-expected CPI. But the drop in BTC price on July 13 catalyzed a 33 percent rally. According to analyst Akash Girimath, if history repeats itself, yesterday’s drop in Bitcoin price could be the start of another rally.
If the bullish thesis is correct, the four-hour chart shows $18,935 as the ideal place to accumulate. Apart from that, the midpoint of roughly $19,000 also seems appropriate. According to Girimath, BTC should produce a daily candlestick above the 30-day Exponential Moving Average (EMA) around $19,600. If it produces, this rise will be confirmed.
BTC price bounce could point to $25,000
If buyers step in, the bounce in Bitcoin price could deepen. Such a move could be the start of the rally that pushes the crypto to retest the $25,000 level. Emphasizing the importance of the aforementioned hurdle, the analyst says, “investors should set aside some of their profits to cover their risks.” However, turning the $25,000 level into a support barrier will be a sign that the bulls are back. In such a case, market participants expect BTC to rush to the $28,000 to $29,000 levels. Interestingly, these levels are where price gaps occur every weekend in CME Bitcoin contracts.
There is other data supporting this $27,000 or higher level. One of them is transaction data from IntoTheBlock’s Global In/Out of the Money (GIOM) model. This metric shows that about 5.24 million addresses are “in the money” that have bought about 3.2 million BTC at an average price of $21,450. So, turning this hurdle into a support base could give these investors a chance to add more to their holdings. According to the analyst, this could lead to an increase in buying pressure that pushes the price of Bitcoin up.
On the other hand, if Bitcoin price fails to break above $21,450, or roughly $21,500, it will indicate weak buying pressure. This development will bring BTC down and it could produce a daily candlestick near the $19,000 level. In this case, the bullish view becomes invalid. Such a development will invite panic sellers to sell their assets. It will create more selling pressure on the investor group and trigger a sale. As a result of this move, the Bitcoin forecast also changes. According to Girimath, Bitcoin price risks returning to the $15,500 support level.
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