The cryptocurrency market continues its excellent start to the week, with Bitcoin approaching a key psychological level after adding nearly 2% to its value in the last 24 hours.
The leading cryptocurrency briefly touched the $98k level but has slightly retraced towards the $96k level at press time.
The positive performance comes amid improved risk appetite fueled by softer-than-expected US inflation data on Tuesday.
The resumption of massive inflows into spot Bitcoin ETFs also suggests that institutions are now adding more positions into the market.
Macroeconomic data boosts risk appetite
The cryptocurrency market has performed well over the past few days, with Bitcoin, Ether, and XRP recording massive gains during that period.
On Tuesday, the US Bureau of Labor Statistics (BLS) released data on Tuesday showing that the US Consumer Price Index (CPI) rose 2.7% YoY in December.
The headline and core CPI rose by 0.3% and 0.2%, respectively, on a monthly basis. This was followed by the Producer Price Index (PPI) data on Wednesday, which rose 3%, higher than expected.
These data increase the odds of the Federal Reserve cutting interest rates this year, resulting in Bitcoin’s price rallying to $98k on Wednesday.
In addition to that, institutional demand for Bitcoin products has resumed strongly.
CoinGlass data revealed that Bitcoin spot ETFs recorded inflows of $854 million on Wednesday, the highest single-day inflow since October 6.
If this inflow continues, BTC could extend its ongoing rally. The current macroeconomic conditions favor further inflow by institutional investors.
Is Bitcoin heading towards $100k?
The BTC/USD 4H Chart is bullish and efficient as Bitcoin is currently trading above $96k.
The technical indicators are bullish, suggesting that Bitcoin could rally higher in the near term.
The Moving Average Convergence Divergence (MACD) indicator on the 4-hour chart remains in a buy signal triggered three weeks ago, suggesting that bullish momentum could expand further.
The Relative Strength Index (RSI) of 68 also shows that BTC is not yet in the overbought territory, suggesting there is further bullish expansion on the horizon.
A close of the daily candle above the 100-day Exponential Moving Average (EMA) at $95,987 would confirm BTC’s short-term bullish outlook.
If the bullish trend continues, BTC could rally toward the key psychological $100,000 level. The bulls will likely face resistance at the 200-day EMA price of $99,581.
On the other hand, if the market undergoes a correction after its recent expansion, BTC could extend the decline toward the key support at $94,253 and the 50-day Exponential Moving Average (EMA) at $91,858.
Currently, the market conditions are bullish, with technical indicators supporting further upward expansion. The retracements encountered could be pullbacks before Bitcoin races on to new resistance levels.