Bitcoin’s Short-Term Rally: How CPI and Ethereum ETFs Could Impact the Market

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Bitcoin has hit the initial downside target of $55,000. While the market appears oversold, a short-term countertrend rally is on the way, supported by macroeconomic factors and the SEC’s possible approval of the Ethereum ETF. Despite these short-term catalysts, 10x Research has warned Bitcoin, claiming it is not a significant buying opportunity in the mid-term.

As the crypto market braces for potential shifts, Top analyst and 10x Research’s CEO Marcus Thielen predicts significant developments surrounding Ethereum ETFs and potential implications for Bitcoin. According to their recent report, all six applicants vying for spot Ethereum ETFs have submitted updated S-1 forms, a crucial step indicating imminent approval by the SEC. This development coincides with expectations of a market rebound, fueled by anticipations of a softer US Consumer Price Index (CPI) report due Thursday. 

Market Rebound Possible, If? 

In their Saturday report titled “Bitcoin: Preparing for Next Week,” 10x Research outlined scenarios for a possible market recovery. They noted oversold indicators signaling a potential short-term reversal, with two out of three reversal indicators now bullish. Despite Bitcoin’s recent challenges, the Relative Strength Index (RSI) stands at 38%, suggesting conditions are ripe for a brief upswing. However, caution is advised, as failure to breach the $60,000-$62,000 range could trigger further downside pressures.

Historically, Bitcoin prices have weakened in August and September. A potential rate cut rally could push Bitcoin near $60,000, though it may struggle to sustain above this level. The bond market is currently pricing in two rate cuts for this year following disappointing employment data and a higher-than-expected unemployment rate of 4.1%.

Bitcoin is currently oversold with two potential upside catalysts—the US CPI data and the SEC’s potential approval of the Ethereum ETF. These events might trigger short-covering and a brief rally, providing temporary relief in the current downtrend.

Bitcoin and US CPI Data

Going deep over the year, CPI prints led to negative price moves for Bitcoin, and lower CPI prints led to positive moves, which were invalidated last month. Despite a lower CPI reading of 3.3% in June, Bitcoin still fell from $68,000 following the release. The report anticipates the next inflation print on July 11 will show a further deceleration to 3.2% or even 3.1%, presenting an opportunity for lower inflation figures and potentially bullish sentiment for Bitcoin.

Implications for Bitcoin

Moreover, the new investors focus on Ethereum’s ETF prospects, a potential threat to Bitcoin. The report underscores the delicate balance between market sentiment and technical indicators. As investors await regulatory decisions, particularly on Ethereum ETFs, Bitcoin’s trajectory hinges on broader market dynamics and regulatory clarity.

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