Summary:
- Bitcoin has gained value from roughly $21.3k during the weekly close to a local high of $22.5k.
- Bitcoin is trading directly below the critical 200-week moving average, which has marked market bottoms in past bear markets.
- BTC gaining in the crypto markets comes at a time when the United States posted its highest inflation in 40 years at 9.1%.
- New Zealand has also announced record-breaking inflation, with the EU, UK, Canada, and Japan expected to announce their CPI this week.
Bitcoin has had an eventful 24 hours, having broken the $22k resistance level after the weekly close and looking to reclaim the all-important 200-weekly moving average at the $22,500 price level.
The latter weekly moving average has previously marked bear market bottoms, and Bitcoin flipping it from resistance to support would be monumental in turning crypto-trader sentiment from one of fear to optimism.
What the Daily BTC/USDT Chart Says.
A brief look at the daily BTC/USDT chart below reveals that Bitcoin remains in bearish territory, trading below the 200-week (red), 50-day (white), 100-day (yellow), and 200-day (green) moving averages. BTC is currently battling the 200-week moving average and 50-day moving average as resistance levels.
Successful reclamation of the latter two MA’s could signal additional new growth to the 100-day moving average around the $28k price area.
Bitcoin Turns Bullish Amidst Record Breaking Inflation in the US and NZ.
Bitcoin’s fortunes turning for the better in the crypto markets come less than one week after the United States’ inflation hit a 40-year high of 9.1%. In addition, New Zealand just announced record-breaking inflation of 7.3% marking its highest level in 32 years.
EU, Canada, UK, Japan to Announce CPI Data this Week.
Furthermore, the EU, United Kingdom, Canada, and Japan are also expected to release their annual inflation data this week. Given the inflation data from the US and New Zealand, it is highly probable that they too will post record-breaking yearly inflation.
Is Bitcoin Finally a Hedge Against Inflation, or Was it a Short Squeeze?
With the above information and events, one can quickly conclude that Bitcoin posting gains amidst record-breaking CPI data could mean that investors are finally warming up to BTC as a hedge against inflation.
However, the CEO of CryptoQuant, Ki Young Ju, identified last week that a Bitcoin short-squeeze could be in the pipeline given the tendency of late shorter to become increasingly confident as BTC loses value. He shared his analysis of the short squeeze through the two-part Twitter thread below.
To be clear, I didn't say that the parabolic bull run is about to start.
I'm just saying it seems close to the bottom, and it's time to wait until this short squeeze event happens. It could be for like a few months or years for the next parabolic bull run, we never know.
— Ki Young Ju (@ki_young_ju) July 14, 2022
Therefore, caution is advised going long on Bitcoin, given that the current price action is potentially a short squeeze. BTC’s correlation to global macro-economic events could resume soon after, and bearish sentiment could return.