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(Kitco News) – The cryptocurrency market resumed its uptrend on Wednesday afternoon as Bitcoin’s (BTC) price surged higher, pulling the rest of the crypto market along for the ride as traders grow increasingly optimistic about the fledgling bull market.
Stocks got off to a hot start but saw the momentum wane as the day progressed despite the Producer Price Index dropping 0.5% in October, the largest decline since wholesale inflation dropped 1.2% in April 2020. This further strengthened traders’ assumption that the Federal Reserve will continue to pause interest rate hikes, and could potentially resort to lowering rates in early 2024.
At the closing bell, the S&P, Dow, and Nasdaq all managed to finish in the green, up 0.16%, 0.47%, and 0.07%, respectively.
Data provided by TradingView shows that Bitcoin bulls started to push the price action in the early hours on Wednesday, lifting the top crypto back above $36,000 by midday before an afternoon stampede drove it to a daily high of $37,887. BTC has since pulled back to support at $37,600, where bulls now look to regroup before making a run at resistance at $38,000.
BTC/USD Chart by TradingView
The early strength from bulls resulted in “November Bitcoin futures prices [trading] firmer in early U.S. trading Wednesday,” according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“The BTC bulls still have the firm overall near-term technical advantage,” Wyckoff said. “A price uptrend on the daily bar chart remains in place.”
Addressing Tuesday’s CPI report, Markus Thielen, head of research at Matrixport, said an extended analysis of inflation data suggests that “U.S. inflation could fall to 1.6% in 2024,” which “would allow the US Federal Reserve to cut interest rates materially (150-200 basis points).”
“The result would be an ongoing rally in risk-on assets, such as tech stocks and crypto,” he said. “Bonds would also rally, turbocharging lower-quality tech stocks and second/third-tier crypto coins – a trend we have observed in the last two weeks.”
Thielen said Tuesday’s lower-than-expected inflation report has prompted traders to move up their estimates for the first Fed rate cut from June to May.
“While the March FOMC meeting might sound too early, we expect the rate cuts to be persistent as soon as inflation falls closer to 2.0%,” he said. “Based on our analysis, we expect to see a ‘2-handle’ very soon.”
U.S. CPI data. Source: Matrixport
Another bullish factor noted by Thielen was the passage of a stopgap bill by the U.S. House of Representatives that would secure funding for the government into the New Year and prevent a Federal government shutdown. While the Senate still needs to approve the bill, it’s expected to pass and be signed by President Joe Biden later this week.
Thielen said the result of a government shutdown could have led to a 10% decline for Bitcoin, while implied volatility would have been crushed.
“We were ready to give up on our long-held view that Bitcoin would rally to $45,000 by the end of this year,” he said. “While this target appeared unreachable when we published it on February 2, 2023 (Bitcoin traded at $22,500), the House passing the government funding bill keeps this year-end price target alive. A Bitcoin sell-off was averted, and the market could see a relief rally as expectations for a Bitcoin ETF approval occurring any moment are kept alive.”
Prior to the afternoon spike, MN Trading founder Michaël van de Poppe noted the strong showing of support near $35,000 and said the subsequent pump above $37,000 suggests that a new yearly high could soon be hit, with the possibility of BTC reaching $40,000.
#Bitcoin did hold the $34,800-35,200 area and continued to bounce from this zone.
High chances we’ll see some new highs coming in or atleast a sweep.
Wouldn’t be surprised of even $40K to be a potential level. pic.twitter.com/SKWhqFfnyK
— Michaël van de Poppe (@CryptoMichNL) November 15, 2023
Technical analyst Mags said that BTC has now flipped $36,100 from resistance to support and identified $43,100 as the next major resistance zone.
#Bitcoin flipped $36100 weekly resistance into support, the next weekly resistance is around $43100 area.
Price has not closed a single weekly red candle in the past 30 days.. pic.twitter.com/A4R4z6Q3vz
— Mags (@thescalpingpro) November 15, 2023
Sea of green in the altcoin market
The altcoin market was off to the races with the surge higher for BTC, with all but one token in the top 200 recording gains on Wednesday.
Daily cryptocurrency market performance. Source: Coin360
DeFi protocol Joe (JOE) was the biggest gainer, increasing by 27.6% to trade at $0.432, followed by a 25.74% gain for Kaspa (KAS), and a 24.25% increase for THORChain (RUNE). Astar (ASTR) was the only token to record a notable decline, falling by 4.66% to trade at $0.07.
The overall cryptocurrency market cap now stands at $1.44 trillion, and Bitcoin’s dominance rate is 51.3%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
