Bitcoin’s Current Rise is a ‘Game Of Chicken’?

Lavina Daryanani
Source: Steemit

From January 1st’s high of $47.9k, Bitcoin dropped to a low of $42.3k by January 13 in 2022. This year’s tale, however, is different. Over the past 13 days, Bitcoin has registered 10 green candles on its chart.

From its January 1st low of $16.49, the asset’s price went on to register a multi-week high of $19.1k yesterday. At press time, BTC was priced at $18.8k, resulting in a ~14% rally so far in 2023.

Source: TradingView

Also Read – Bitcoin: ‘Tension’ To Likely Build Up By End Of January, Why?

The Game Of Chicken

The last green candle was a result of the post-inflation data release hype pump. For context, the US Bureau of Labor Statistics revealed yesterday that US’s inflation rate fell to 6.5% in December, down from November’s 7.1%. The number was at par with expectations, and as a result, Bitcoin could climb from $17.89k to $19.1k.

After the Fed’s meeting last month, San Francisco Fed President Mary Daly was quoted saying,

“To be honest with you, I don’t quite know why markets are so optimistic about inflation.”

Now that inflation is gradually getting back under control, bets are being made that the Fed could cut rates as early as the second half of the year. A recent report from the Wall Street Journal highlighted,

Traders in interest-rate derivatives markets see a 90% chance that the Fed lifts rates two more times this year, to around 4.9% by March, according to CME Group. They see a 60% chance that the Fed then cuts rates at least once by December.

The Fed, however, seems to be on a different page. After their meeting last month, officials noted that interest rates will continue rising to around 5.1% throughout spring. None of them hinted towards cuts this year.

The discord between what people are expecting versus the reality painted by officials in the meeting makes the situation a classic game of chicken.

As long as the macro uncertainty persists, the odds of a sustainable recovery are quite slim. As highlighted in a recent article, the ongoing pump could be a bull trap, opening the doors for Bitcoin to drop down to the $15.5k to $16.6 range to collect liquidity.

Read More: Will Bitcoin face a ‘bull-trap’ post-December CPI Numbers?