Bitcoin [BTC] bounces above 50-day MA, but what should LTH expect?

[ad_1]

An increase in demand for BTC in the spot market has been observed over the past 24 hours at press time. Addresses with balances greater than 1,000 BTC have not yet started accumulating.

An interesting thing just happened with the Bitcoin price action. It managed to pull off a 5% rally in the last few hours before this press, briefly topping its 50-day moving average. This move happened right after the release of US CPI data and here’s why.

Read Bitcoins [BTC] Price Prediction 2023-2024

The reason for Bitcoin’s rally over the past 24 hours is the same reason why it has been on a bearish trajectory for most of 2022. Inflation has risen and the Federal Reserve has hiked rates in an attempt to rein it in . Higher rates led to a difficult investment environment and the liquidation of investment assets.

CPI: 7.15 vs. 7.3 Exp. This is the first part of what we expected this week. Tomorrow, Powell will increase by 0.5% instead of 0.75%!

— Ran Neuner (@cryptomanran) December 13, 2022

The latest Consumer Price Index (CPI) data came in at 7.15. This figure is lower than the consensus estimate of 7.3, so the final figure exceeded investors’ expectations.

More importantly, it means inflation is finally down. This result means that the Fed’s fight against inflation is yielding positive results. It also means the investment landscape is improving, which is why the CPI report encouraged some accumulation.

Should investors expect more upside?

All eyes are now on the Federal Reserve which is expected to make an interest rate decision in the coming hours. There might be more hope for Bitcoin bulls if the FED raises rates by 50 BPS, rather than 70 BPS.

Meanwhile, the on-chain metrics already look quite favorable. The past 24 hours have been characterized by an increase in Bitcoin open interest, suggesting that demand for BTC in the derivatives market has been on the rise.

An increase in demand for Bitcoin in the spot market has also been seen over the past 24 hours at press time. This was reflected in bitcoin exchange outflows which were almost double exchange inflows, at the time of writing.

Source: CryptoQuant

But we need to gauge demand from whales and institutions to determine if Bitcoin can sustain the same momentum.

Holdings of the Purpose Bitcoin ETF continued to shrink their balances and had yet to start accumulating. This is despite the improving BTC outlook over the past 24 hours. The metric represents institutional demand which currently suggests it is not quite there.

As for the demand for whales, addresses with balances above 1,000 BTC have also not started accumulating. This could be a sign that the latest rise will be limited since institutional and whaling demand is absent.

The next 24 hours should be quite interesting due to the upcoming interest rate review.

[ad_2]