After the recent weekly close, the BTC/USD pair showed slight bullish momentum before the Wall Street open on December 12th.
With volatility yet to appear, the largest cryptocurrency continues to trade in a narrow range, and analysts are growing impatient over the new catalysts.
They agree that these should come in the next few days – US economic data is due, and its content and impact on economic policy is likely to have a significant impact on the cryptocurrency markets.
Elsewhere, the precarious status quo persists — bitcoin miners are struggling, sentiment is lacking inspiration, and traders are increasingly drawing comparisons to the pits of previous bear markets.
Where could BTC price action head next week? Cointelegraph takes a look at five specific factors influencing the trajectory.
Main focus of the “most important” CPI print models
The phrase on everyone’s lips this week is the Consumer Price Index (CPI) – the main measure of consumer price inflation in the US.
While it is released every month, the most recent CPI reading, due on December 13th for November, has additional significance to the market. With two weeks to go until the end of the year, chances of a risky asset “Santa Rally,” for example, now hang in the balance.
It’s not just the CPI report itself; The Federal Reserve’s Federal Open Market Committee (FOMC) will decide to raise interest rates this week, and Chairman Jerome Powell will deliver a speech that market commentators will scrutinize for signs of a policy change.
“CPI report Tuesday, Fed raise rates and JPow speaks Wednesday. Keep an eye out for volatility,” the analytics resource’s on-chain physical indicators summarized over the weekend.
Popular trader MisterSpread added that other decisions outside the US had “one of the most (if not the most) important” weeks of the year.
Meanwhile, trading firm QCP Capital wrote in a market update: “Tuesday’s CPI will be ‘the most important CPI release ever’, this time because the market has prepared it to be with a short two-month squeeze rally.”
“A higher-than-expected CPI reading and further Fed tightening have the potential to negate this rally, as we saw in the April and August reversals. On the other hand, another disinflationary reading could see many chasing a continuation of the rally into the end of the year.”
Regardless of whether it’s up or down, CPI tends to cause market volatility surrounding its release, with calm returning only after Powell’s speech accompanying the interest rate decision.
According to CME Group’s FedWatch tool, the current consensus calls for a 50 basis point rate hike this month, suggesting a Fed backtrack in what could turn out to be an important policy turning point.
At the time of writing, the probability of 50 bps is about 75%.
Federal goal rate odds chart. Source: CME Group
Financial commentary source The Kobeissi Letter also called this week the “biggest week of the year” with a warning to investors.
“Imagine the madness if the Fed wasn’t pivotal or the November CPI was above the October print at 7.7%,” read part of a Dec. 8 tweet:
“This is why you don’t want a market controlled by the Fed.”
The BTC spot price is waiting for action
With everyone focused on the Fed, traders realize that policy and macro numbers will de facto determine what happens to BTC/USD in the days ahead.
Aside from force majeure, there may be little to do but sit and wait for the data to circulate.
Meanwhile, BTC/USD continues to range in very familiar territory around the $17,000 mark, data from Cointelegraph Markets Pro and TradingView shows.
BTC/USD 1-day candlestick chart (Bitstamp). Source: TradingView
Unchanged for several days, the pair looks directionless as the dust from the FTX internal breakdown continues to settle.
“BTC has been oscillating between the realized price (green) and the equilibrium price (yellow) since June,” the analysis source On-Chain College summarizes in a mid-term trend:
“I’m interested in continued movement outside of that range, which hasn’t happened yet.”
BTC/USD “Bear Levels” Chart. Source: On-Chain College / Twitter
Some had stricter opinions on Bitcoin’s price performance. Matthew Dixon, founder and CEO of cryptocurrency rating platform Evai, called on Bitcoin to “complete a massive correction higher” to reverse most of the losses from FTX.
Annotated BTC/USD chart. Source: Matthew Dixon / Twitter
Meanwhile, popular commentator Profit Blue confirmed that $10,000 will be back on the radar before the start of 2023.
“Bitcoin is heading to $10k and likely to drop there soon. Pay attention to the details,” read the caption on the accompanying chat.
Annotated BTC/USD chart. Source: Profit Blue / Twitter
The US dollar raises renewed strength
Meanwhile, Trader Blantz strongly predicted a change in direction for the US dollar, and warned that Bitcoin could make a bearish end to the year.
The US Dollar Index (DXY), under pressure for weeks, has begun to close higher lows on daily timeframes,