Bitcoin (BTC) maintained its position above £76,000 on 14 January following the release of US Producer Price Index (PPI) data, which offered a welcome boost to risk assets, including cryptocurrencies and stocks. The price recovery came after BTC/USD had dipped to its lowest levels in two months.
US PPI Data Sparks Relief Across Markets
The December PPI figures, released ahead of the Wall Street open, revealed smaller-than-expected increases in inflation. The monthly rise was 0.2%, below the forecasted 0.4%, while annual data showed a rebound in inflation since February 2023 but remained below market fears.
The figures brought relief to traders and the Federal Reserve, albeit with caution about ongoing inflationary pressures. Market analysts noted that while PPI was a positive indicator, attention now shifts to the upcoming Consumer Price Index (CPI) data.
“The PPI inflation figures are encouraging but not definitive,” noted The Kobeissi Letter, adding, “Markets will closely monitor CPI tomorrow, which will be crucial in shaping the Federal Reserve’s approach.”
BTC/USDT 4-hour chart. Source: Crypto Chase
Stocks rallied on the PPI report, with some market participants entertaining the possibility of a more hawkish stance by the Fed, including a potential rate hike. Trading firm QCP Capital highlighted this possibility, stating, “Surprises could tilt markets towards a prolonged higher-rate environment.”
Bitcoin’s Price Recovery Gains Momentum
Bitcoin’s recovery from a drop below £71,000 was bolstered by the improved macro sentiment. Rising over 2% on the day, the cryptocurrency demonstrated resilience, reclaiming and holding the £76,000 level.
Traders remained divided over whether the rally marked a sustainable recovery or a short-term rebound. Popular trader Skew noted the market’s cautious stance, pointing out that low funding rates and limited risk-taking suggested hesitancy among participants.
“Price seems underweight given the current market sentiment,” Skew commented. “While we may not have seen a sweep below £67,000, the relatively low positioning reflects caution.”
On the other hand, trader Crypto Chase described the price movement as “an optimal local move,” while urging caution regarding premature bullish sentiment.
Technical Indicators Signal Optimism
Analyst Rekt Capital highlighted technical patterns indicating potential strength for Bitcoin. Specifically, the relative strength index (RSI) showed an “exaggerated bullish divergence,” which could signal further price gains.
BTC/USD 1-day chart with RSI data. Source: Rekt Capital
“Daily close above £72,000 has been secured,” Rekt Capital noted. “The £72,000-£80,000 range and early-stage higher low on the RSI remain intact, keeping the bullish divergence valid.”
Despite the positive momentum, market participants remain cautious as Bitcoin navigates the £72,000-£80,000 range, with broader economic indicators like CPI expected to play a key role in determining future price action.
Looking Ahead
As traders prepare for the release of CPI data, the overall sentiment remains one of cautious optimism. Bitcoin’s ability to hold above critical levels and align with broader market trends will likely determine whether the current rally can evolve into sustained growth.
