Bitcoin ended the week well. US inflation data and Ethereum Shanghai update coming soon

According to the Cryptocurrency Screener Cryptovizorwhich determines the price of BTC/USD based on the results of trading on 7 spot exchanges, the weekly candlestick of bitcoin closed at $28,328, which is the best result in the last 10 months.

Bitcoin weekly chart. Source: Cryptovizor

Trader Rekt Capital believes that Bitcoin has confirmed the end of the downtrend. He wrote on twitter:

BTC is at the start of a mid- to long-term rally. It would be a shame to miss out on the exponential growth associated with the halving.

Bitcoin monthly chart. Analytics: Rekt Capital

Michael van de Poppe, head of the trading firm Eight, is also optimistic, including on short timeframes. He noticed to the fact that all market participants want to go long at the $25,000 level – and that is why they will not be given this opportunity. He wrote:

In my opinion, another test of $28,600 will end with a breakdown upwards.

6 hour bitcoin chart. Analyst: Michael van de Poppe

He also cited the release of the US consumer price index (CPI) as a significant development this week.

Macroeconomic situation

CPI Data for March will be published on Wednesday, April 12 at 15:30 (MSK). The forecast on an annualized basis corresponds to 5.6% (the current value is 5.5%).

CPI is one of the main indicators that the US Federal Reserve uses when deciding whether to raise rates further. The higher the inflation, the more the case for tightening policy, and the worse it is for bitcoin, as the rate hike reduces the amount of liquidity available to investors. According to current forecastsMay 3, the Fed will raise rates by 0.25%.

The likelihood of a US Federal Reserve rate hike on May 3. Source: fedwatch

By the way, about liquidity. An interesting trend emerged last week: the Fed reduced the balance, however, the liquidity of the US dollar was growing. Analyst Tedtalksmacro explained this is because the flow of money from the Treasury Department (which bails out the banks) has exceeded the Fed’s cut. Of course, the fable “Once a Swan, a Cancer, and a Pike” comes to mind, but it is important for us that, as a result, liquidity grows, and this is the main thing that Bitcoin needs for growth.

USD liquidity and bitcoin chart. Source: Trading View

Ethereum Shanghai

Another highlight of the week will be the Ethereum Shanghai upgrade, which (EIP-4895) will make available the 1.1 billion ETH (worth about $2 billion) that was locked in staking in 2020. Does this mean an upcoming sale?

Most likely not: firstly, unlocking will not happen instantly, but will take a whole year, and secondly, at the time of staking, Ethereum was more expensive than it is now, so it is unlikely that the holders of the asset will start selling it at a loss – especially against the backdrop of prospects for a cryptocurrency market rally.

Analytical resource The Modern Investor warned alarmists:

Attention: you will just be selling your ETH to whales.

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