Key takeaways
- BTC is up by less than 1% and is trading above $87k.
- The market is preparing for the CPI data release in a few hours.
Bitcoin trades above $87k
The cryptocurrency market has been choppy since the start of the week, with most coins and tokens currently trading in the red. Bitcoin is trading at $87k after losing the $90k psychological level earlier this week.
The bearish performance comes ahead of the release of the CPI data in the United States later today. U.S. inflation data for November, expected to show a 3.1% increase in CPI, could influence Federal Reserve interest rate decisions.
With the October CPI absent due to the government shutdown, the November CPI will give investors a fresh look at price pressure.
Some analysts are optimistic that Bitcoin could experience a temporary relief in the near term. Nick Forster, Founder at the onchain options platform, Derive.xyz, stated that,
“BTC positioning remains decisively bearish. 30-day BTC volatility has climbed back toward 45%, while skew hovers around -5%. Longer-dated skew is also anchored around -5%, signalling that traders are pricing continued downside risk through Q1 and Q2, as ongoing sell pressure from previously inactive wallets weighs on spot prices.”
The analyst added that for BTC, the probability of reaching $100K sits near 30%, while the chance of reclaiming all-time highs remains around 10%.
BTC could risk a deeper correction
The BTC/USD 4-hour chart is bearish and efficient as Bitcoin has underperformed over the past few days. The bearish performance comes after Bitcoin’s price faced a rejection from a descending trendline on Friday and has lost 7% of its value since then.
The leading cryptocurrency retested the $85k support level on Wednesday but has bounced back and is now trading above $87k per coin.
If the correction continues and Bitcoin closes the daily candle below the $85,569 support, Bitcoin could extend the decline toward the psychological $80,000 level.
The Relative Strength Index (RSI) on the daily chart is at 41, below its neutral level of 50, indicating bearish momentum gaining traction. Moreover, the Moving Average Convergence Divergence (MACD) lines are also within the bearish region.
However, if BTC recovers and closes above $85,569, it could extend the rally towards the resistance level at $94,253.