Bullish view

• Buy the BTC/USD pair and set a take-profit at 71,845.
• Add a stop-loss at 67,430.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 68,000 and a take-profit at 66,000.
• Add a stop-loss at 70,000.

(Click on image to enlarge)

Bitcoin price rebounded after the weak US inflation data and then erased some of those gains after the relatively hawkish Federal Reserve decision. The BTC/USD pair initial jumped to almost 70,000 and then retreated to 69,000.

Hawkish Federal Reserve decision

Bitcoin and other risky assets rose after a report showed that the US inflation was falling. The data showed that the headline CPI fell to 0.0% MoM in May, missing the estimated increase of 0.1%. It dropped from 3.4% to 3.3% on a YoY basis.

Core inflation dropped to 3.4% from the previous month’s 3.6%. These numbers mean that inflation is making some modest improvements even though it remains above the Fed’s target of 2.0%.

Bitcoin then erased some of the initial gains after the Fed delivered a somewhat hawkish statement. While Jerome Powell noted that inflation was making modest improvements, he noted that it was still uncomfortably high and that the Fed was prepared to be patient.

The Fed pointed that it will deliver one rate cut this year. Earlier this year, it had predicted as many as five rate cuts as inflation moved towards the 2% target.

Bitcoin and other cryptocurrencies are highly sensitive to Federal Reserve actions. In most cases, they do well when there is hope that the Fed will cut interest rates. Ideally, in a low interest rate environment, investors are usually comfortable taking risks by investing in risky assets.

Bitcoin has also consolidated amid weak ETF inflows this week. Most Bitcoin ETFs have lost some assets this week. In all, they shed about 2,000 coins on Wednesday. Still, the industry has over 880k coins valued at over $61 billion.

BTC/USD technical analysis

Bitcoin has been in a tight range in the past two months. It has remained between the resistance of near 72,000 and the support level at 66,570. It rebounded to almost 70,000 after the encouraging inflation data and then pulled back to below 69,000.

Bitcoin has remained inside the Ichimoku cloud indicator and has moved slightly above the 50-period moving average. The Average True Range (ATR), a popular measure of volatility has pointed upwards slightly.

Therefore, Bitcoin’s outlook is neutral for now, with the key support and resistance levels to watch being at 67,430 and 71,845.

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