Bitcoin Price Prediction: BTC Flashes to $38K as Lower CPI Data Fuels Rally

The Bitcoin price has rallied more than 5% over the last 24 hours to trade at $37,460 as of 2:30 a.m. EST.

After Tuesday's sell-off which saw BTC drop as low as $34,770, bulls took charge on Wednesday producing the largest daily candlestick since Oct. 23 as the Bitcoin price climbed to brush shoulders with $38,000.

The Wednesday rally was fueled by a drop in the U.S. dollar index (DXY) and treasuries which took some pressure off risk assets. This came after the latest inflation data cooled expectations of additional interest rates from the Federal Reserve, encouraging traders to re-enter the market.

The U.S. consumer price index (CPI) data came in as a surprise to the downside, missing on both headline CPI (4% vs 4.1% expected) and core CPI (3.2% vs 3.3% expexcted).

For digital assets like BTC, this is good news since it is a non-interest-bearing asset. As such, the higher interest rates are, the greater the opportunity cost to owning BTC is.

According to data from Coinglass, a crypto futures and information platform, longs suffered the worst of this week's volatility, with nearly $110 million worth of long positions liquidated during the pullback on Tuesday as compared to $18.8 million worth of liquidated short positions.

The current bullishness in the crypto market is evidence that interest in the asset class continues to rise, with both institutional players as well as retail traders starting to increase their level of involvement particularly on the hopes of a spot Bitcoin ETF being approved in the near term.

The Bitcoin halving, which is anticipated to occur in April 2024, is also seen as a driving force behind the current bullish momentum.

Crypto trader and investor going by the name Titan of Crypto on X said, "Make no mistake about it, the halving rally is going to happen. BTC is in the last straight line, FOMO will kick in hard very soon."

A combination of these factors: a possible spot Bitcoin ETF, the impending halving and deteriorating global financial conditions, is creating almost perfect bullish conditions that are expected to make the next bull market the biggest in the history of the pioneer cryptocurrency.

Bitcoin Price Uptrend is Intact as $50,000 Comes Into the Picture

The BTC rally began on Oct. 23 when the big crypto bounced off the 200-day Exponential Moving Average (EMA) around $26,850 rising 41% to brush shoulders with $38,000 on Nov. 15.

Although the price has slightly dropped from this level, the technical set-up showed that BTC's uptrend was still strong.

All the major EMAs were moving sharply upwards, accentuating the strength of the uptrend. These trend-following chart overlay indicators also represented areas of strong support on the downside for the flagship cryptocurrency. These were areas defined by the 50-day EMA, the 100-day EMA and the 200-day EMA at $32,725, $30,704, and $28,993 respectively.

The Relative Strength Index (RSI) was still positioned in the positive region. The price strength at 69 suggested that the market conditions still favored the upside.

As such, BTC could rise from the current levels first toward $40,000 and later to the $41,000 level, embraced by the 127.2% Fibonacci retracement level. Above that, the next logical move for the bulls would be the $45,000 and $50,000 psychological levels.

BTC/USD Daily Chart

On the downside, the RSI showed that Bitcoin was recently massively overbought. As such, the buying momentum could soon run out of steam as sellers book profits on the latest rally to $38,000.

If this happens, BTC could turn down from the current level with the first line of defense arising from the 78.6% Fibonacci retracement level at $35,613. Additional lines of defense could emerge from the $34,000 psychological level and the $32,400 support floor embraced by the 50% retracement level.

Traders could expect Bitcoin's downside to eb capped here in the short term. This would represent a 14% decline from the current levels.