YEREVAN (CoinStats.app) — Bitcoin (BTC) has climbed above $41,000 as investors are returning to riskier assets amid persistently higher inflation in the U.S. and the U.K.
The flagship cryptocurrency, often touted as “digital gold” by hardcore Bitcoin supporters, rose to over $41,500 this Thursday. The rebound rally started April 11, after its bids had fallen to as low as $39,204, following a 14.6% month-to-date correction. As a result, Bitcoin’s overall paper profits in the last three days came out to be a little over 6%.
Bitcoin’s modest rebound this week came with two key reports on inflation. In the U.S., the Consumer Price Index (CPI) for March increased 8.5% from a year ago, its highest level in four decades, according to the Bureau of Labor Statistics report published on April 12.
Meanwhile, the U.K. inflation reached 7% in March for the first time in 30 years due to rising fuel prices.
Eric Weiss, founder, and chief investment officer at Blockchain Investment Group, a New York-based digital asset hedge fund, blamed the U.S. Federal Reserve for causing “bad inflation” after printing 41% more U.S. dollars than in its lifetime since March 2020.
Weiss projected Bitcoin as a long-term solution against rising consumer prices, noting that he would take his chances with the cryptocurrency.
Similar sentiments appeared across Crypto Twitter, with many analysts posting “buy Bitcoin” texts after the inflation reports.
Nonetheless, some of them also highlighted flaws in the “buy Bitcoin” strategy. For instance, Jan Wüstenfed, an economist at Quantum Economics, a market research newsletter, cited massive outflows from the Purpose Bitcoin ETF as an indication of investors reducing exposure to BTC.
In detail, on April 12, investors withdrew 840 BTC from the spot fund. The next day, they took away another 1,830 BTC.
“Notable is the more frequent occurrence of outflows and the relatively big size of outflows since March,” wrote Wüstenfed, adding:
“While the outflows themselves should not be market moving, it is a possible indication that investors are reducing exposure to #Bitcoin in times of high inflation, high uncertainty, and a FED that is tightening monetary conditions.”
From a technical perspective, Bitcoin has been defined by the movements within the bearish flag.
In detail, bearish flags are candlestick chart patterns that signal the extension of the downtrend once the temporary pause is finished. After a strong downtrend, the price action consolidates within the two parallel trend lines in the opposite direction of the downtrend. Once the supporting trend line gets broken, the bear flag pattern is activated as the price action continues trading lower.
Consequently, Bitcoin’s current skew indicator is shifting to the downside.
This puts Bitcoin at risk of retesting again at the $30,000 level.