The iShares Bitcoin ETF (IBIT) remained in a consolidation phase on Wednesday after the US published strong inflation numbers. The fund, which tracks the price of Bitcoin, was trading at $40, in the same range it has been in the past few weeks.
Fed rate hike possible
The biggest news of this week came out on Wednesday when the US published the latest consumer price index (CPI) data. These numbers changed the Fed’s calculus on interest rates.
The headline Consumer Price Index (CPI) rose to 3.5% in March, higher than the expected increase of 3.4%. Core inflation remained at 3.8%, almost double the Fed target of 2.0%.
These numbers were higher than what analysts were expecting. They also signal that the country’s inflation is taking longer than expected to move to the Fed’s target.
They also show that the US dollar is continuing to lose its purchasing power as prices have jumped by over 20% in the past few years.
The main implication of all this is that these numbers could have an impact on the Federal Reserve. Earlier this year, analysts were expecting that the Fed would deliver four rate cuts this year, with the initial one coming in March.
Now, there are signs that the Fed will not cut rates after all. Some analysts, including Larry Summers, believe that the bank will hike interest rates to battle inflation. Others believe that the bank will maintain rates intact for longer.
These events have a major impact on key financial assets like Bitcoin, the US dollar, and American stocks. The Dow Jones index plunged by more than 500 points while the US dollar index (DXY) surged to its highest point this year.
Meanwhile, inflows in most Bitcoin ETFs have slowed recently as the coin consolidates. Still, some of these funds have become giants in the past three months. The iShares Bitcoin ETF (IBIT) has gained over $18 billion in assets while the Fidelity Wise Origin Bitcoin ETF (FBTC) has more than $10 billion.
IBIT ETF forecast
The IBIT ETF has been in a tight range in the past few days. A closer look at the four-hour chart shows that it has remained above the 50-period Exponential Moving Average (EMA), which is a bullish sign.
The fund has also remained above the Ichimoku cloud indicator while the Relative Strength Index (RSI) has moved slightly above the neutral point. Most importantly, it has formed a symmetrical triangle pattern. This pattern may also be seen as a bullish pennant.
Therefore, the outlook for the iShares Bitcoin ETF is extremely bullish, with the initial target to watch being $42.10, its highest point this year. A break above that point could see it jump to $50.
A key catalyst for this bullish move will be the upcoming Bitcoin halving event, which is set for the next two weeks.
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