Bitcoin price has remained under pressure since hitting its all-time high in mid-April. Since then, it has declined by about 46.89%. In addition to other influential factors, there has been growing skepticism over the crypto’s effectiveness as a store of value and medium of exchange.
On the one hand, numerous companies including Lowes, Microsoft, and Home Depot continue to accept Bitcoin as a mode of payment. Recently, Bitcoin price got a boost when El Salvador passed into law the use of Bitcoin as a legal tender.
However, JP Morgan warns that the move may cause major challenges for both the cryptocurrency and the country. A team from the bank has stated,
“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year.”
The report further indicates that the subsequent illiquidity and volume may limit the crypto’s potential as a legal tender. Bitcoin’s high volatility is also a key challenge. The International Monetary Fund has also questioned the rationale of the government’s move.
Investors are now keen on the US inflation data scheduled for Tuesday. The forecasted core CPI of 0.4% MoM is lower than the prior month’s 0.7%. Notably, a lower-than-expected reading may be a bullish catalyst for Bitcoin price.
Bitcoin price technical outlook
After its surge late on Sunday, Bitcoin price has eased as it finds support at the psychological level of 34,000. In the previous session, the crypto rose from 33,692 along the 25-day EMA to an intraday high of 34,597.75. At the time of writing, it was up by 0.09% at 34,289.50. On a two-hour chart, it is trading above the 25 and 50-day EMA.
In the near term, I expect Bitcoin price to remain range-bound between 33,530.11 and 34,644.16 ahead of the US CPI figures. As a reaction to the data, a move above the horizontal channel’s upper border will place the next target at the psychological level of 36,000. However, the bulls will need to clear the resistance at 35,108.36. On the flip side, the bears may manage to push the prices past the support level at 33,530.11 to the lower level of 32,60.72.