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Bitcoin tests $58k

BTC advanced 2.45% to $57,367 on Wednesday, October 13. Yesterday’s session turned out to be quite interesting. During the first half of the day, price action dropped 4.3% to $54,167, in the absence of negative drivers. Further losses came on the back of technical factors. But then, during the North American session, the BTCUSD pair reversed course and spiked to $57,777, up 6.66% on the day.

Heighted volatility followed the release of US inflation data. The September consumer price index grew 5.4% YoY, up from 5.3% in the previous month (vs. the 5.3% median consensus). Given that the report came out before the Fed minutes, traders initially reacted by buying into the dollar, while the 10-year UST yield increased slightly. Bitcoin was trading at $54,880, without budging. It took about an hour before the market turned around abruptly. This is where the price started to climb.

The yield on 10-year Treasuries moved 3.8 bps lower to 1.542% by the North American close. Gold gained from the decline in yields, climbing to $1,796/bbl. After the FOMC minutes came out, the dollar continued to sell off.

According to the September FOMC minutes, the Fed could commence the process of tapering its bond purchases as early as mid-November. The pace of asset buying is expected to decline by $10 bln per month in Treasury bonds and $5 bln in mortgage-backed securities.

Investors have chosen Bitcoin as a hedge against inflation, which has surged in recent months. The price spike was also driven by higher energy prices and supply chain disruptions.

In today’s Asia trading, price action rose to $58,532. On the daily TF, buyers fail to break out of the $57,800-60,000 resistance zone. Price levels are lined up in such a way that the resistance zone is wide. In European trading, Bitcoin is trading at $57,422. Bitcoin is temporarily under pressure when altcoins are being bought for it. This means that the external backdrop looks favorable for the uptrend to reach $60k.

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