Bitcoin’s first bearish signal since October is here. With key U.S. data ahead, traders are on edge — will BTC hold support or break lower?
Table of Contents
Bitcoin faces uncertainty
A big week for economic data
Volatility ahead?
Bitcoin faces uncertainty
Bitcoin (BTC) is currently facing a precarious situation as it struggles to reclaim six-figure value. Investors are preparing for key economic data that could determine the market’s next move.
On January 20, Bitcoin reached a record high of $109,114, coinciding with Donald Trump’s inauguration as the 47th U.S. president. Since then, it has dropped by about 11%, currently trading at $97,300 as of February 10.
Trump’s recent discussions on tariffs have added to market volatility. On January 9, he indicated the possibility of imposing a 25% blanket tariff on steel and aluminum imports, along with “reciprocal tariffs” on every country.
A formal announcement is expected to be made as early as February 11 or 12, with steel tariffs possibly taking effect even sooner on February 10.
On February 1, the U.S. imposed 25% tariffs on imports from Canada and Mexico and 10% on Chinese goods, causing turbulence in global financial markets, including the crypto market.
While sentiment has somewhat stabilized after a temporary rollback of these tariffs, the market remains fragile and is awaiting clarity on the next steps.
Another concerning sign is that the Moving Average Convergence Divergence (MACD) 12,26, a widely used momentum indicator, has turned negative for the first time since October 2024.
The MACD measures the difference between two moving averages, the 12-day and 26-day Exponential Moving Averages, to track momentum shifts.
The last time the MACD turned negative was in April 2024, and it remained that way for about six months. During that period, Bitcoin’s value fell from $64,000 in late April to $49,000 by August 2024, a decline of 23%, before the trend finally reversed.
Now, with various macro risks accumulating and key economic data set to be released, the question arises: Can Bitcoin regain its strength and push back towards six figures, or is a deeper correction on the horizon?
A big week for economic data
Bitcoin’s fate this week hangs in the balance as several significant economic data points approach. With inflation numbers, labor market updates, and Federal Reserve signals all set to be released in the coming days, investors are on high alert.
Each data point has the potential to shift market sentiment, influence rate expectations, and determine the next major move for risk assets, including cryptocurrencies.
CPI inflation report
At 8:30 a.m. ET on Wednesday, February 12, the Consumer Price Index (CPI) report for January will be released, providing a major macro trigger for the market. The CPI is a key inflation gauge that measures the cost of living and is closely monitored by investors.
Analysts anticipate that consumer prices increased by 2.9% year-over-year, the same rate as in December. Meanwhile, core CPI, which excludes the more volatile food and energy prices, is predicted to slightly ease to 3.1% from 3.2% in December.
On a month-to-month basis, the overall CPI is projected to decline to 0.3% in January, down from 0.4% in December. However, core CPI is believed to have risen to 0.3% from the previous 0.2%.
CPI inflation swaps for January currently indicate a 2.9% increase in headline CPI, aligning with analysts’ expectations.
If the actual figure falls below these expectations, markets might price in additional rate cuts from the U.S. Federal Reserve, which could weaken the dollar and potentially boost riskier assets like Bitcoin.
Conversely, if inflation remains persistent or exceeds expectations, it could prompt the Fed to slow or pause its easing cycle. This outcome would likely negatively impact risk assets, including cryptocurrencies like Bitcoin.
Powell’s testimony holds the key
All eyes will be on Federal Reserve Chair Jerome Powell as he testifies before Congress on February 11-12, providing the latest insights into monetary policy.
The hearing, hosted by the Committee on Banking, Housing, and Urban Affairs, is part of the Semiannual Monetary Policy Report to Congress, where Powell will address economic conditions, inflation, and interest rates.
Market participants are eagerly awaiting any hint about the Fed’s next move. Since September 2024, the central bank has cut rates by 100 basis points, bringing them to 4.25%-4.50% as inflation cooled from its 2022 highs.
However, Powell has cautioned that the fight against inflation is not over. If he signals a slower pace of rate cuts, the U.S. dollar could strengthen, putting pressure on Bitcoin. Conversely, any indication that cuts may accelerate could drive bullish momentum for cryptocurrencies and stocks.
Jobless claims and producer prices
The next important data release is scheduled for Thursday, February 13, with the initial jobless claims report and the Producer Price Index (PPI).
Jobless claims will provide a fresh perspective on the labor market. The latest data from the last week of January showed initial claims rising to 219,000, surpassing expectations, while continuing claims climbed to 1.88 million.
These figures suggest a slight softening in the job market, consistent with the expectation that higher rates are slowing economic activity.
At the same time, PPI data will offer insights into wholesale inflation, which often indicates future consumer price trends. If producer prices continue to cool, it could reinforce the view that inflation is easing, strengthening the case for additional Fed rate cuts.
However, if the PPI comes in higher than expected, markets may interpret it as a sign that inflation risks persist, prompting a more cautious outlook.
Retail sales and consumer strength
The final major data point will be released on February 14 with the U.S. retail sales figures.
Consumer spending is a key driver of economic growth, and the report will indicate whether households are reducing their spending or continuing to spend despite higher interest rates.
A slowdown in retail sales could signal weakening economic conditions, strengthening the Fed’s case for additional rate cuts, potentially benefiting Bitcoin.
Conversely, if spending remains strong, it may suggest that inflationary pressures persist, making the Fed more cautious and keeping liquidity tighter, which could limit the upside for cryptocurrencies.
Volatility ahead?
Crypto analysts are closely monitoring Bitcoin’s next move as a crucial week unfolds, with economic data and the Fed’s signals poised to impact market sentiment.
Michaël van de Poppe remains bullish, suggesting that Bitcoin could test $105,000 this week and potentially reach new all-time highs before the end of the month.
His optimism hinges on macro conditions aligning favorably for Bitcoin, which means inflation needs to continue cooling and Powell must leave room for rate cuts sooner rather than later.
If markets sense that liquidity conditions will ease faster than expected, Bitcoin could quickly reverse its recent losses and climb back towards six figures.
However, not everyone is convinced that the market is ready for another leg up just yet.
Analyst Decode warns that $91,000 is a key level to watch, and if Bitcoin fails to hold it, the drop could be swift and steep, dragging prices down to $70,000 before a meaningful recovery.
While Decode believes that the bull cycle is not over, he suggests that Bitcoin may undergo an extended and more complex movement rather than a straightforward upward trajectory.
Therefore, with a week filled with potential market-moving events, traders should be prepared for sharp swings in either direction.