Economic Data Drives Bitcoin Traders To Keep Up The Rally

As Bitcoin climbed over key levels in the early morning hours of Thursday, traders were watching economic data in the days ahead as possible triggers for a bump above key levels that could confirm calls for the beginning of a new bull market as BitcoinBTCUSD +0.18% was continuing to rise.

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In the past 24 hours, the price of Bitcoin has climbed 0.1 percent to $28,600. In recent trading, the largest digital asset briefly climbed over $29,100, which is its highest level since last June, when the crypto crash accelerated into a brutal bear market. Despite rising from around $16,500 at the beginning of the year, Bitcoin's rally has sparked speculation that a new bull market may be underway, with traders keeping an eye on the psychologically significant $30,000 level, which marks the last point before prices fell during June.

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During the upbeat mood on the stock market, the price of Bitcoin returned to its upper limit of March trading, according to Alex Kuptsikevich, an analyst for FxPro. In the context of this formation, there may be an upside target around $35,000; however, Bitcoin may face short-term selling pressure since it is already near $30,000.

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The price of Bitcoin has risen along with the Dow Jones Industrial Average and the S&P 500, so that it is now trading on the same level as stocks and stocks have gained ground as investors shed fears from their panic over the dire state of banks a few weeks ago and look ahead to what inflation will bring for the economy.

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There have been a number of macroeconomic factors that have correlated cryptocurrency and stock prices, which have played an important role in determining Bitcoin's performance. As traders continue to deal with intense and increasing regulatory headwinds against digital assets, they are paying attention to interest rates. As the Federal Reserve has been ratcheting up rates since last March in a bid to rein in decades-high inflation, higher rates dampen demand for more risky assets like cryptos.

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Cryptocurrency market prices have risen due to evidence that inflation is cooling, accompanied by concerns over the health of lenders, an unintended consequence of higher interest rates from the Fed. This has led to speculation that the Fed will become more accommodative with monetary policy, and even cut rates in the near future, thus boosting cryptocurrency prices. 

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There are several important data points due in the next few days that may confirm, or at least shake, the Fed's inflation narrative, but the third estimate of U.S. gross domestic product (GDP) will be published just before the personal consumption expenditures (PCE) index for February, which is the preferred inflation indicator for the Fed.

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The Bitcoin Opportunity Fund's managing partner, James Lavish, said that investors have been positioning themselves and their books ahead of some crucial data this week. These include the GDP and inflation data, as well as the PPI price data.

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It is considered by bullish traders to want both indicators to show a decline in GDP and to be accompanied by a dovish turn from the Fed. In his view, this would result in the Fed easing back on rate policy if the economy becomes weaker, which would be evidenced by a lower GDP print. As well as encouraging a dovish turn from the central bank, a slowing PCE may confirm market pricing that when the Fed meets in early May, interest rates will remain unchanged.

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However, it is not all risky.

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According to Lavish, there is a high probability that we either will have another credit-like event or we will be headed straight toward a recession with the prospects of lagging effects from the rapid rate raises still ahead. As for the price, I personally am being cautious, and I will only add whenever the time comes.

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The second-largest crypto, EtherETHUSD –0.49%, fell 1% to $1,800, which is below Bitcoin. Smaller cryptocurrencies or altcoins were weaker, with both Cardano and PolygonMATICUSD –1.62% losing 2% each. Meconis' performance was more of the same, with Dogecoin DOGEUSD -1.44% losing 2% and Shiba Inu Shiba USD -0.65% shedding 2% as well.