Such arguments have helped to boost price for bitcoin, which traded Monday around $7,700, up 7.8% on the year. The performance looks especially impressive when compared with the Standard & Poor’s 500 Index of large U.S. stocks, down 11% in 2020.
Bitcoin traders love to talk about inflation – especially the possibility that consumer prices might eventually shoot up due to the trillions of dollars of new money injected into global markets this year by the Federal Reserve and other central banks.
The Conference Board, a 104-year-old think tank, published survey results on Tuesday showing a record drop this month in U.S. consumers’ assessment of current business and labor-market conditions.
Elsewhere, consumer expectations for inflation over the next year have now jumped to 5.3%, their highest since October 2014, and up from 4.5% a month earlier, according to Ian Shepherdson, chief economist at the forecasting firm Pantheon Macroeconomics.
These numbers are so far off the current inflation rate, as measured by the Labor Department’s consumer price index, that it’s hard to take them too seriously. They’re also contrary to the recent trend, which shows prices falling, not rising, in response to the deflationary forces of an economic contraction.
Some 25 million jobless claims have been filed since mid-March, typically a harbinger of falling wage pressures; oil prices are down nearly 80 percent; roundtrip flights from the U.S. to Europe are going for $200. An April 10 report from the Labor Department showed that prices increased by 1.5% in the 12 months through March, slowing from the prior month’s 2.3% pace.
BTC: Price: $8,117 (BPI) | 24-Hr High: $8,175 | 24-Hr Low: $7,684
Trend: Bitcoin has passed key resistance around $8,000 and is eyeing stronger gains ahead of the reward halving due on May 12.
At press time, the cryptocurrency is hovering near $8,120, representing a 4.5% gain on the day. Prices have notably crossed the widely-tracked 200-day average, bolstering the short-term bullish setup.
Indeed, the area around $7,972 was packed with multiple technical resistances. For instance, the 100-day average was located at that level, while the 61.8 percent Fibonacci retracement of the drop from $10,500 to $3,867 was seen at $7,960. Further, the trendline falling from Feb. 13 and Feb. 18 highs was around $7,965.
A convincing move above a major resistance cluster often invites stronger chart-driven buying, so bitcoin could continue to gain altitude ahead of the reward halving.
Other indicators are supportive of continued gains: the 5- and 10-day averages are trending north, indicating a solid upward momentum; the 14-day relative strength index is reporting strongest bullish bias in over three months with an above-65 print; and the higher bars on the daily chart MACD histogram are another sign of strengthening of bullish momentum.
Adrian Zduńczyk, chartered market technician and CEO of trading community The BIRB Nest, thinks the cryptocurrency’s got room to rally to $8,400 and $8,600.
Meanwhile, some analysts expect bitcoin to test five figures before May 12 on the bullish narrative surrounding the supply-altering event.