Bitcoin climbed on Monday evening, topping the key psychological level of $30,000 as investors awaited key inflation data later in the week that could steer crypto prices.
The largest cryptocurrency by market cap rose 7% to $30,193.25 for the first time since June, according to Coin Metrics. Ether advanced more than 3.5% to $1,925.11 for the first time since August as investors awaited the Ethereum network’s latest tech upgrade, scheduled for Wednesday.
Now that bitcoin has touched $30,000, a move into the mid- to high-30s will be “likely” if it pushes through with conviction and would “force short speculators to cover and buy instead,” said James Lavish, managing partner at the Bitcoin Opportunity Fund. “Some investors are trying to get positioned ahead of that,” he said.
Bitcoin (BTC) and ether (ETH) YTD
Traders are likely speculating that Wednesday’s consumer price index number “could come in at a level that gives the Fed reason to think about pausing raising rates in the next meeting, thereby giving a boost to assets like bitcoin,” Lavish added.
Investors are also watching the latest reading on the producer price index, due out Thursday.
Cryptocurrencies have been rallying this year. Monday night’s action brings bitcoin’s year-to-date gains to more than 80%, while ether has now added 60% for the year so far. Price moves for the two crypto assets have historically tracked relatively in line on a percentage basis, but the top two crypto assets “decoupled” in March, thanks to a “flight to quality” in bitcoin following bank closures.
Nevertheless, the two cryptocurrencies remain somewhat correlated for the time being and macro drivers continue to influence both assets. The upcoming inflation data will be key in determining if or when the Fed will pause or put an end to its rate hiking campaign.
Meanwhile, ether has been climbing ahead of its planned “Shanghai” tech upgrade, which is expected to bring a wave of negative sell pressure on the market as previously locked funds on Ethereum are released over the next few weeks.