Bitcoin

The Bitcoin price is struggling even on brightening conditions for the biggest cryptocurrency in the world. BTC is trading at $57,756, which is lower than the weekend high of $59,620. Its market cap is still more than $1.07 trillion. It has also underperformed other altcoins like Bitcoin Cash, Ethereum, and Dogecoin.

BTC has lagged ETH, DOGE, and BCH recently

Bitcoin and US macro picture

On Friday, the Bureau of Labour Statistics (BLS) published relatively weak economic numbers from the United States. The data revealed that the economy added fewer jobs than expected while the unemployment rate rose to 6.1%. These numbers were surprising since previous flash data like the ADP private payrolls, PMIs, and initial jobless claims were stellar.

These numbers have a strong role to play for Bitcoin and other cryptocurrencies. For one, they imply that the US recovery is not all that strong. As such, they signal that the Fed will likely leave interest and the expansionary policies unchanged for a while. This is a good thing for Bitcoin prices because it means that the dollar will remain in the defensive. In fact, the dollar index has declined substantially after the weak NFPs.

US dollar index has nosedived

However, employment numbers play a single role in monetary policy. The Fed also pays close attention to inflation. In fact, the US will publish the latest inflation data on Wednesday this week. In general, analysts expect that the data will show that inflation rose by more than 3% in April while core CPI rose to 2.3%. 

These numbers will be above the 2% target of the Federal Reserve. Therefore, if they are substantially higher, it means that the bank will be at a difficult place. It will be torn between intervening to curtail inflation or to leave the status quo to support the labour market. 

Recent data show that consumer prices are rising. For example lumber prices have quadrupled in the past 12 months while copper price has surged to an all-time high. Crude oil and iron ore prices have also surged.

If inflation is significantly above estimates, it could push Bitcoin price lower because it will imply more rate hikes. If it disappoints, the BTC price will likely retreat.

Bitcoin price prediction

The three-hour chart shows that the BTC price recovery has found a major resistance slightly below $60,000. Today, the price has formed a rising wedge pattern that is typically a bearish sign. It is currently at the lower side of this wedge pattern. Also, it is along the 38.2% Fibonacci retracement level.

Therefore, the pair will likely bounce back and retest the resistance at $59,552 and then break out lower as it nears the wedge’s confluence level. If this happens, the currency could decline to $53,000, which is about 8% below the current level.

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