Bitcoin, on the verge of falling to $70,000?...Countdown to its fate on the 12th

▲ Bitcoin (BTC), S&P 500/AI generated image

An analysis suggests that Bitcoin (BTC) could fall to around $70,000 ahead of the release of the U.S. April Consumer Price Index (CPI). It is diagnosed that its price defense capability could weaken compared to the previous two CPI announcements, due to a combination of re-accelerating inflation concerns, weakening institutional buying, and technical bearish signals.

Cointelegraph reported on May 10 that the Cleveland Federal Reserve's Inflation Nowcast estimated the April headline CPI increase at 3.56% year-over-year. This is higher than the 3.3% recorded in March. The monthly CPI increase was expected to be 0.45%, lower than the previous 0.9%, and core CPI was projected at 2.56% year-over-year and 0.21% month-over-month. The official U.S. April CPI is scheduled to be released on May 12.

Inflation trends show mixed signals. While the monthly increase is expected to slow, the potential for the year-over-year headline CPI to rise again is cited as a factor weakening expectations for rapid interest rate cuts by the Federal Reserve (Fed). Cointelegraph analyzed that such an environment could put pressure on speculative risk assets like Bitcoin.

Bitcoin avoided a deep correction even after previous high-inflation CPI announcements. When the headline inflation rate in the March CPI rose from 2.4% in February to 3.3%, Bitcoin subsequently increased by over 15%. At that time, institutional buying absorbed more than 500% of the newly mined Bitcoin supply, with MicroStrategy accounting for a significant portion. However, MicroStrategy has now halted Bitcoin purchases, and STRC preferred shares are trading below their par value of $100. If STRC falls below par, the efficiency of new share issuance decreases, which could limit MicroStrategy's ability to raise funds for additional Bitcoin purchases.

Market analyst Killa stated in an X (formerly Twitter) post on Sunday that large investors might reduce their risk exposure around the time of the inflation announcement. He said that the weekly open of $78,600 is a key defense line, and if this level is lost, the range of $74,000 to $75,000 could be the next downside target. He added that liquidity exhaustion movements around that point could be a signal for determining the next direction.

Technically, Bitcoin is also forming a classic rising wedge pattern on the daily chart. A rising wedge pattern is generally interpreted as a bearish reversal signal if it breaks below the lower trendline, potentially leading to a decline equal to the maximum height of the pattern. Cointelegraph analyzed that Bitcoin is heading towards a convergence point around $84,000 where the two trendlines meet, and if a downward breakout occurs in this zone, it could fall to the measured target of around $70,000. Conversely, if it breaks above this convergence point and the 200-day exponential moving average, the bearish structure could be invalidated, in which case the next upward target is suggested to be in the range of $90,000 to $95,000.

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