Bitcoin dips below 70k with the Middle East & CPI data in focus

Bitcoin is dipping below 70k as investors continue to monitor developments in the Middle East and ahead of US CPI data. The price has remained within a familiar range of 65k-71k since early February, despite larger moves in other risk assets.

Bitcoin’s resilience has come amid risk sentiment in the markets, which has been closely tied to the conflict in the Middle East, and more specifically to energy supplies through the Strait of Hormuz. Oil prices briefly surged to $120 per barrel on Monday before falling sharply to $85 per barrel yesterday, after Trump said that the war in Iran could be over soon. The IEA are also looking to release 300-400 million barrels of reserves to help oil prices. However, it's worth noting that oil prices remain 25% higher than at the end of February, and the Strait of Hormuz remains effectively closed.

Higher energy prices have increased concerns about inflationary pressures and pushed back expectations for central bank rate cuts. The market doesn’t expect the Federal Reserve to cut interest rates until September, pushed back from June at the end of last month. Typically, higher rates for longer periods bode poorly for BTC, yet the largest cryptocurrency still trades 3% higher this week. That said, should the Iran war continue for a few weeks, yields could rise further and BTC could come under more pressure.

US CPI brings no surprises

Inflation will remain in focus today with the release of US CPI data, which showed that inflation remained unchanged at 2.4% YoY in February, in line with forecasts, and core CPI stayed at 2.5%. This data point doesn’t capture the increase in energy prices from the Iran war until next month. As a result, the CPI is seen as outdated and has been largely shrugged off by the market. Institutional demand has remained solid at the start of this week. According to SoSoValue data, spot BTC ETFs recorded inflows of $250.92 million on Tuesday, bringing total inflows to $167.03 million. Should BTC ETF inflows continue and intensify? BTC could see further upside in the coming days.

BTC technical analysis – can BTC break out?   BTC continues to consolidate within a familiar 65k to 71.5k range, where it has traded broadly since early February. The price is above the 20 SMA, near the upper end of the range, keeping buyers hopeful of a breakout to the upside. Momentum will need to pick up for buyers to rise above 71.5k to break out, bringing 74k, the March high and 50 SMA into focus. A rise above here creates a higher high, opening the door to 80k, the round number, and the November 21 low. Sellers will be looking for a break below 65k to open the door towards 60k. 

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