Financial analyst Justin Bennett says that the inflation data coming out this week will be the biggest test of the year so far for crypto markets.
In a new video, update the popular trader says that the Consumer Price Index (CPI) and the Producer Price Index (PPI) data could rattle the macro environment and significantly affect crypto.
“We not only have CPI or PPI, but we have both back to back next week, so these events are going to be ones to pay attention to not only for the stock market but also for the crypto market…
CPI and PPI are going to give us an idea of what kind of inflation we’re looking at right now in the economy. Obviously, inflation is a big topic right now because it is dictating how quickly the Fed and other central banks are raising rates. The faster and more aggressively that these central banks are increasing interest rates, the more pressure it’s putting on the economy and also financial markets as a whole.
That includes crypto. Obviously, Bitcoin has been following the S&P 500, so financial markets as a whole are going to be watching both of these events next week.”
The analyst says that Bitcoin (BTC) needs to see a daily close above the $23,000 level to flip this area back to support. At time of writing, BTC is trading at $23,950.
“If we do see that, $23,450 is going to be next. You can see where the market is so far, struggling to get above that today. In fact, today’s high so far is $23,476, that’s no coincidence. Again $23,450 is the resistance level to watch.
If next week’s inflation data comes out lower than forecast or it’s expected or higher than forecast yet the market rallies, what I’m going to be looking for from Bitcoin and the way I’m going to be trading this is if we get a daily close above $23,000, then I’ll look to bid that as new support. Same thing with $23.450.
Very simple: If the market can close above $23,000, $23,000 becomes support. If we close above $23.450, that level becomes support.
Key resistance above that is going to be right around $24,200, that’s obviously a major hurdle here for Bitcoin and one to watch if we do get that break higher.
If the market can really start to rally next month into the rest of August, one level to keep an eye on here is going to be mid $25,000. I’ve talked about this before but mid $25,000 is going to be an area to watch.”