Investing.com-- Bitcoin price rebounded on Monday, as investors anticipated upcoming United States inflation data for April, which could play a crucial role in influencing the Federal Reserve's decision on whether and when to reduce borrowing costs in 2024.
The dollar fell slightly on the day, relieving some of the pressure on crypto markets.
Bitcoin climbed 2.5% in the past 24 hours to $62,639.1 by 08:16 ET (12:16 GMT). Just hours earlier, the world’s largest cryptocurrency was close to breaking below the $60,000 support level.
The token sank over 2% in the past seven days, as fears of more U.S. regulatory action against the crypto market further soured sentiment. This was exacerbated by signs of sustained capital outflows from crypto investment products, chiefly spot Bitcoin exchange-traded funds (ETFs
Dollar slips as US inflation test approaches
The U.S. dollar, one of the key negative catalysts for Bitcoin and crypto prices in recent weeks, fell slightly on Monday ahead of the consumer price index (CPI) report for April.
Producer price index data is due on Tuesday, while the more closely watched consumer price index reading is due on Wednesday.
Any signs of sticky inflation are likely to further diminish expectations of early interest rate cuts by the Federal Reserve- a scenario that bodes poorly for crypto markets.
Cryptocurrencies tend to thrive in a low-rate, high-liquidity environment, and the prospect of high-for-longer U.S. rates presents the opposite of such a scenario.
More comments from Fed officials are also on tap this week, after a slew of officials questioned expectations of early rate cuts.
Crypto prices took little support from comments from Presidential candidate Donald Trump, who voiced support for the industry and accused the Biden administration of trying to wipe out the industry. Trump also said that his campaign would accept crypto donations.
Bitcoin falling below $60K could spur panic sell-off - analyst
Bitcoin may experience a panic sell-off if it fails to maintain the $60,000 level in the near future, FxPro trader Alex Kuptsikevich told CoinDesk in a note.
Traders are eyeing a rise above $65,000 to shift market sentiment to bullish.
Since March, Bitcoin has been fluctuating between $60,000 and $70,000, with the much-anticipated halving event in April not providing the boost many expected, ultimately becoming a 'sell-the-news' scenario due to a lack of fresh market catalysts.
Recent reports indicate a decline in inflows from ETFs, further contributing to the prevailing bearish mood.
Kuptsikevich noted in a recent CoinDesk briefing that the price trend has been marked by a series of lower lows and lower highs, suggesting that investors are likely selling during price rallies.
“There is pressure likely related to asset sell-offs by miners and fears of tighter regulation of cryptocurrencies,” Kuptsikevich said, referring to the post-halving decline in mining difficulty.
“A failure below $60K could trigger something of a panic sell-off. The positive scenario, in our opinion, will become the main one with a rise above $65K, fixing the price at the 50-day moving average and the reversal area in early May,” he added.
Crypto price today: Altcoins see mixed performance amid uncertainty
Broader cryptocurrency prices witnessed mixed performance on Monday as traders anxiously awaited the latest insights into inflation trends.
World no.2 crypto Ethereum added 1% to $2,959.61, while XRP rose 0.4% and Solana fell 0.16%.
Memecoins also varied in performance, with Dogecoin marginally down 0.1%.