As the world’s first cryptocurrency, Bitcoin continues to make headlines as it climbs the charts once again. Surging past the $28,000 mark on May 10, 2023, Bitcoin is capitalizing on the slower-than-expected inflation rate in the United States. In this article, we’ll provide an in-depth analysis of Bitcoin‘s recent price movement, the potential factors driving this increase, and the insights experts share about its future direction.

Lower Than Expected US Inflation Rate

Data from popular exchanges like Gate.io showed Bitcoin lingering in a narrow trading range ahead of the April Consumer Price Index (CPI) release. Recent reports indicate that the US CPI inflation rate fell to 4.9% in April, lower than the anticipated 5.0%. This decrease is significant news for Bitcoin, as the cryptocurrency often gains value amid inflation concerns. With its decentralized nature and capped supply, investors see Bitcoin as a potential hedge against inflation.

In the minutes following the news, the price of Bitcoin rose more than 1% to above $28,000. CPI serves as a conventional volatility trigger for high-risk assets such as Bitcoin and is one of the key factors the Federal Reserve takes into account when determining interest rates. While the next change is a month away, experts predict the decline in inflation to persist or even accelerate in the coming months.

Bitcoin Price Analysis

Without a catalyst in the market, Bitcoin was trading sideways below the $28,000 level for nearly a week. With the US CPI’s release, Bitcoin got the required catalyst as it broke out past the $28,000 level, hitting a peak of $28,327. And while the cryptocurrency is experiencing a pullback, it has successfully sustained above the $28,000 mark, making it a critical support level for Bitcoin.

The crypto is currently in an uptrend, and the bulls are trying to push it toward the $29,000 resistance level. If the bulls can push the price above this resistance level, it might mean that the corrective phase is over. As a result, Bitcoin could first rally to $30,000 before attempting an up-move to $32,500.

On the other hand, if the price turns down and breaks below the $28,000 support, Bitcoin could descend to the breakout level of $25,250. It is a crucial level to monitor because a fall below this level could intensify Bitcoin‘s selling rate, plunging its price to the psychologically important level of $20,000.

Experts Share Insights on Bitcoin’s Future Direction

Amid Bitcoin‘s impressive performance, several industry experts have weighed in on the cryptocurrency’s next move. In a recent interview, Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, shared his perspective on the future direction of Bitcoin‘s price. He suggested that a continuation of the current bullish trend could push Bitcoin‘s price toward the $30,000 level, which would be a significant psychological barrier for the cryptocurrency. However, he also warned that the market’s volatility might cause Bitcoin to undergo price corrections in the short term.

Moreover, McGlone highlighted the increased adoption of Bitcoin as an Inflation Hedge by institutional investors, which could lead to further growth for the cryptocurrency. He believes that the ongoing trend of corporations and financial institutions allocating a portion of their portfolios to Bitcoin is likely to persist, further solidifying its status as a store of value. Meanwhile, other experts have shared similar thoughts, saying the cryptocurrency’s resilience in the face of regulatory headwinds and macroeconomic uncertainties is a testament to its growing importance as a global financial asset.

The Role of Bitcoin as an Inflation Hedge

As mentioned earlier, one of the critical factors driving Bitcoin‘s recent rally is its potential as an inflation hedge. With its fixed supply and decentralized nature, cryptocurrency is considered a reliable store of value, particularly during economic uncertainty.

The COVID-19 pandemic and the subsequent economic downturn have accelerated discussions around the utility of Bitcoin as an inflation hedge. With central banks worldwide injecting massive amounts of liquidity into the market and implementing ultra-low interest rate policies, concerns about inflation have become increasingly widespread.

As a result, both retail and institutional investors have turned to Bitcoin as a means of protecting their wealth against potential inflation. This growing interest in Bitcoin has further driven its price upward, solidifying its status as a legitimate financial asset.

The BRC-20 rush

BRC-20 token standard is a new breed of fungible tokens that leverages Ordinals and Inscriptions to manage and create token contracts, token transfers, and token minting, all of which are stored on the Bitcoin base chain.

As of May 9th, BRC-20 Bitcoin tokens have surged beyond $1 billion in total market capitalization, accompanied by a trading volume of $207.7 million over the past 24 hours. Some of the prominent tokens deployed on the blockchain include ORDI, NALS, VMPX, PEPE, and MEME, which have shown significant price fluctuations ranging from +11% to -55% within a day.

The rush to BRC-20 standard is already starting to affect the cost of transactions, which at some point may drastically affect the btc price. Unlike ERC-20, BRC is not based on smart contracts, which takes a slight toll on the blockchain. Major exchanges are also jumping on the bandwagon, with industry leaders like Gate.io, already boasting over six BRC-20 tokens listed and traded on the platform. Such pace of adoption leaves hope that the demand will soon stabilise, lowering blockchain’s transaction cost back to its natural levels.

Conclusion

At the time of writing, Bitcoin is rallying at $28,200, and it appears to be driven by a combination of lower-than-expected US inflation data, growing demand from traders, and increasing interest from institutional investors. As the cryptocurrency cements its status as an inflation hedge and a legitimate financial asset, market participants should continue to monitor the factors that could potentially impact its price.

While the current trend is decidedly bullish, investors should exercise caution and remain informed about the ever-changing landscape of the cryptocurrency market. With its proven resilience and growing importance in the global financial ecosystem, Bitcoin‘s future looks promising. Still, it is crucial to stay vigilant and well-informed to navigate this dynamic market.