Bitcoin is still trading flat around $63,500 despite US producer inflation data showing price pressures easing in July.
At the time of writing, Bitcoin is trading at US$63,474, up 0.09% since the Asian session opened on Friday.
This situation raises the question of whether Bitcoin will trigger a new rally or remain stuck in the current trading range.
US PPI Lower Than Expected
Data from the US Bureau of Labor Statistics showed that PPI for final demand was unchanged in July compared to the previous month.
The figure was lower than expected for a 0.2% increase, while the annual PPI fell to 4.7% from 5.5% in June.
The reading was also below market expectations of 4.9%.
The development signals that inflation pressures at the producer level are moderating, in line with US consumer inflation data which also showed more positive developments.
This situation has the potential to reduce pressure on the Federal Reserve (Fed) to maintain tight monetary policy.
Bitcoin Has Not Given a Bullish Response
In theory, a lower PPI should be supportive of Bitcoin.
The easing inflation could reduce expectations of higher interest rates, potentially depressing US bond yields and the US dollar.
This situation usually gives riskier assets like Bitcoin more room to strengthen.
However, Bitcoin is still trading around $63,700 and has failed to maintain momentum above the $64,000 level.
Before the PPI data was released, crypto analyst Ash Crypto also expected a reading below 4.9% to potentially trigger a Bitcoin rise.
The actual reading of 4.7% met the bullish prediction, but the price has yet to show a significant surge.
$64,500 Becomes Bitcoin's Key Level
From a technical perspective, Bitcoin is currently facing resistance around $64,150 to $64,500, while key support is around $63,200.
If BTC manages to break through and remain above $64,500, the buying momentum has the potential to strengthen and pave the way for further increases.
Conversely, a failure to break through the resistance could cause Bitcoin to continue moving in a consolidation phase.
If the price falls below $63,200, selling pressure could potentially increase again even though US inflation data shows positive developments.
For now, the weaker PPI is giving Bitcoin support from a fundamental perspective, but the market still needs confirmation from movements in US bond yields, the dollar and Fed interest rate expectations before Bitcoin can trigger a stronger breakout.
