Bitcoin Bulls, Bears Wrestle Amid Hopeful Signs in Latest Inflation Data

Crypto bulls and bears jockeyed for position as the March consumer price index (CPI) offered hope the U.S. Federal Reserve would be able to avoid lowering interest rates at its next meeting in May.

The latest inflation data coincides with shifts in whale activity and the unveiling of the Ethereum Shanghai upgrade later Wednesday.

The CPI rose 0.1% in March, better than the estimate for 0.2% growth. Core CPI, which removes traditionally more volatile food and energy prices, aligned with estimates for 0.4% growth, down from 0.5% the month prior.

The latest readings continue a months-long trend of easing inflationary pressures. The March 31 release of the Personal Consumption Expenditure price index (PCE), showed prices increasing 0.3%, down from 0.6% the prior month. PCE data is arguably Federal Reserve Chair Jerome Powell’s preferred inflation indicator.

Declining inflation and recent turmoil in the banking industry have led investors to speculate whether the Federal Open Market Committee (FOMC) will pause rate hikes in 2023. The 2 p.m. ET release of FOMC minutes offered few hints of the central bank’s path forward.

As crypto bulls and bears tried to find meaning in the CPI, bitcoin’s price rose to $30,400 before sinking briefly below $30,000. BTC is currently trading just above that threshold.

Ether (ETH) took a slightly different path, pushing higher initially before flattening. Ether investors on Wednesday were weighing not only inflation but the Ethereum Shanghai upgrade, which could send ETH’s price spiraling as stakers of ether un-stake their tokens to potentially sell them. A number of analysts believe the so-called hard fork will have little impact on prices as traders who have long known about the upgrade would have already sold off.

ETH was recently trading 60% higher for the year to date.

While BTC finds its footing, investors might want to monitor unique wallet addresses, particularly larger ones. Among these wallets holding significant amounts of crypto:

• The number of wallets holding between one and 99 BTC and those with more than 10,000 BTC has been growing since January.
• Over the same period, the number of wallets holding between 100 and 9,999 BTC has also been growing.

One explanation could be that investors on the precipice of 10,000 BTC are optimistic, locked into the asset and increasing their exposure – ready to move into a higher tier.

This may represent a base of support for BTC prices because investors who went long the digital asset in January are up 80% year to date.