HomeCryptoIs the Bitcoin breakout a bull trap?

Is the Bitcoin breakout a bull trap?

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The price of Bitcoin continues its rebound initiated during the stock market session of Wednesday, May 1 after establishing a low point at $56,500. The market is now above resistance, but is this enough to avoid the risk of a bull trap?

Bitcoin overcomes resistance following the resumption of US disinflation

Contrary to the adage “Sell in may and go away”, the stock market and the bond market have resumed their upward trend since the stock market session of Wednesday 1er May, with a favorable knock-on effect on the price of Bitcoin.

The stock market remains supported by quarterly corporate results, optimistic profit prospects for 2024 and 2025, as well as the rebound supported by US tech heavyweights (GAFAM), including the superb rebound in shares Apple on medium-term chart support this month of May.

But the general recovery is mainly based on a general easing of market interest rates while the key factor of underlying disinflation seems to have resumed its downward trend in the United States.

This week first saw a surprising and sharp downward revision of ex-factory prices for the month of March in the United States (PPI US).

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Next, the CPI price index was updated in the United States, and certain key components brought hope for a return of underlying inflation to 2% on an annual basis these next months.

This is particularly the case for real estate inflation, which represents 35% of the total CPI calculation and whose real-time indicators still invite optimism.

But it is services inflation that remains a major issue, while leading indicators (ISM services PMI) show a slowdown without this yet resulting in a crushing of services inflation, in especially the price of insurance.

Clearly, if Bitcoin is attempting a bullish recovery, it is because it is taking advantage of this glimmer of hope on the return of US inflation to 2%, leading to a possible pivot by the FED next September . But this glow is still weak and the update at the end of the month of the PCE price index will be decisive. Once again, we have had the demonstration that BTC remains very strongly correlated to the macroeconomy of the United States.

Chart representing the measure of underlying inflation in the United States (CPI price index)

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BTC is bullish above first support at $63,500/64,5000

It is in the columns of Cryptoast (and Cryptoast Research every morning in video) that I study the hypothesis that BTC made a low point at $56,500 during the stock market session on Wednesday 1er may.

In order to confirm my graphic working hypothesis, the Bitcoin price had to be able to overcome technical resistance and this is what it did in the wake of the US inflation update.

From now on, we must confirm the change in technical polarity with BTC which remains bullish in swing trading as long as the 63,500/64,500 dollar interval provides support.

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Chart which reveals the Japanese intraday candles of the BTC/USD price

To deepen my technical analyses, find me on Cryptoast Research YouTube channel !

Find technical analyzes from Vincent Ganne on Cryptoast Research, the ideal place to make your investments in cryptocurrencies successful. You will learn how to position yourself on strategic price levels, spot investment opportunities and anticipate price movements. Join us now and take charge of your crypto investments.

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