BITCOIN Inflation down -0.5% a 9-month low! Is it truly Bullish?


Bitcoin (BTCUSD) is having an initial bullish reaction before the U.S. session opens following a more than expected -0.5% drop on the U.S. CPI to 7.7% from 8.2% in the previous month. This reading beat the forecast by 0.3%. Is a drop to inflation truly bullish for BTC?

To answer this, we should look at the previous 3 times that the CPI had a monthly fall. Since August we basically have falling CPI each month:

* On August 10 the CPI fell to 8.5% from 9.1% the previous month.
* On September 13 the CPI fell to 8.3% from 8.5% the previous month.
* On October 13 the CPI fell to 8.2% from 8.3% the previous month.
* And today (on November 10) the CPI fell to 7.7% from 8.2% the previous month.

As we see on the chart, the August 10 CPI fall instead of a rise caused a massive drop on Bitcoin. The September 13 CPI fall also caused a drop on BTC instead of a rise, though less aggressive. The October 13 CPI fall though did start a rally but not as aggressive as one would expect, but reasonable considering the drop was only 0.1%.

That price action has kept Bitcoin within a Channel Down since the June 18 Low and yesterday the bottom was hit making a new Lower Low. This time though, the 1D RSI is rebounding after breaking yesterday below the 30.000 oversold level. The last two oversold 1D RSI readings caused short-term rallies (May and June-August) which are highlighted (black and yellow lines). Their projections are illustrated within the Channel Down, both showing a touch of the 1D MA200 (orange trend-line) in 4-5 weeks. If it happens, that would be the first 1D MA200 contact since January 02!

Do you think this huge monthly CPI drop will make Bitcoin fall and break below its Channel Down or rebound and test the 1D MA200? Feel free to let me know in the comments section below!

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