Bitcoin (BTC) hovered just under $30,000 during the European hours showing signs of weakness ahead of the release of a key CPI report on Friday.
The asset has traded in a relatively tight range – from the $28,000 to $31,000 level – over the past month amid a poor macroeconomic market sentiment and systemic risks from the crypto space.
Price-charts suggest bitcoin could drop to the support level of $29,400 over the weekend if current levels fail to hold. The asset has bounced several times from those levels over the past week, suggesting interest from buyers at those prices.
Bitcoin hovered just under $29,000 in a show of weakness ahead of Friday's CPI report. (TradingView)
Friday saw weakness in several major cryptos with Cardano’s ADA tokens falling some 7% in the past 24 hours to lead losses among majors. Solana’s SOL fell 6% , ether (ETH) lost 2.3%, while XRP fell a nominal 0.8%.
Overall crypto market capitalization dropped by 2.3% to $1.28 trillion, continuing a slide from over a capitalization of over $2.2 trillion in March 2022.
The fall in crypto prices came ahead of the release of the U.S. Consumer Price Index (CPI) report scheduled for 08:30 ET on Friday. Economists expect inflation in May to rise over 0.7%, meaning an overall 8.3% rise since last year, as per CNBC.
Inflation concerns have contributed to bitcoin’s fall in the past several weeks. In May, the U.S. Federal Reserve (Fed) hiked rates by the largest amount since 2000 as it seeks to tighten monetary policy following $2 trillion in stimulus in the past few years. This caused a drop in global stocks, which carried over to losses in bitcoin and other cryptocurrencies.
Earlier in April, Goldman Sachs (GS) analysts said in a note that the Fed's aggressive measures to control inflation could result in a recession, which added to investor concerns.
While bitcoin has closely followed the price movements of risky technology stocks in the past few months, some market observers remain upbeat about the long-term growth of cryptocurrencies.
“Generally, the correlation gap between cryptocurrencies and stock markets is long-term good news as it attracts the attention of professional investors,” said Alex Kuptsikevich, FxPro senior market analyst in an email.
“Weakness in equity and bond markets, sagging gold, and the murky outlook for the real estate market are turning to cryptocurrencies as another tool in a diversified portfolio,” Kuptsikevich added.