Bitcoin Price Dips On Hot US Inflation Data, But BTC Bulls Can Take Solace in These Bullish Options Market Signals

cryptonews.com:

Bitcoin was last trading lower by over 3.0% on Friday in the low $23,000s, with BTC/USD falling back under its 21DMA for the first time in nearly two weeks in wake of a hotter-than-expected US Core PCE inflation report that raises the risk the US Federal Reserve lifts interest rates to higher levels for longer. MoM and YoY price pressures both unexpectedly rose in January, according to the latest report, to 0.6% and 4.7% respectively.

That has resulted in US money markets pricing in a 40% chance that the Fed will lift interest rates by at least 25 bps at its next four meetings. Prior to Friday’s data, the money market-implied odds for at least another four 25 bps in rate hikes over the course of the next four meetings was 30%. A month ago, markets assigned the likelihood of another 100 bps in rate hikes at roughly zero.

As a result, the US dollar is picking up, US yields are rising and US stocks have come under fresh selling pressure, a bearish combination for the risk-sensitive crypto asset class. Bitcoin traders will continue to monitor upcoming major US data releases and the tone of commentary from Fed officials as they continue to assess the outlook for US monetary policy.

But it seems that Fed tightening fears will continue to act as a near-term headwind for crypto. Indeed, Fed tightening fears have likely been the main factor behind Bitcoin’s recent pullback from earlier monthly highs in the low-$23,000s. But as the specter of a dip back towards the 50DMA in the $22,000 area and perhaps even a retest of recent lows in the $21,400 area looms, Bitcoin bulls can take solace in a few recent options market developments that suggest the 2023 bull market likely remains intact.

Aggregated Open Interest of Bitcoin Options