Bitcoin price has seen a significant rebound following the release of the Consumer Price Index (CPI) data for August. The price has rebounded from the trend around the $55,000 level, and bulls are still struggling to turn the resistance at $58,000 into support. However, despite the strength shown by Bitcoin during this time, there is still skepticism about a recovery. The main questions have been whether this is a real recovery or if the price of BTC is heading for a further decline.

CPI brings fresh hope

Consumer Price Index (CPI) data shows how much consumers pay for consumer goods and services over different periods. It essentially calculates the change in the price of those goods and services, showing whether purchasing power has increased or decreased.

In August, CPI data came in below expectations, which is positive for financial markets. According to reports, instead of the 2.6% annual raise that experts were expecting, CPI data showed an annual raise of 2.5%.

This came as inflation data rose by more than 0.2% month-on-month to 0.3%. However, this did not affect the positive sentiment generated by the CPI data, especially since the 2.5% raise is the lowest level recorded since February 2021, i.e. in more than three years.

Bitcoin price immediately reacted positively to the CPI data release. It jumped about 3% in a single day, retesting the $58,000 level shortly after. However, with the positive sentiment from the CPI data fading, the price could fall from here.

Bitcoin and the cryptocurrency market still in fear

While there has been a revival in Bitcoin and cryptocurrency market sentiment, it is still far from an ideal situation for a edged raise in prices. From last week to this week, the Fear & Greed Index has fluctuated between 22 and 37 on the scale. This means that sentiment is still decidedly bearish.

During times like these, inflows into the market are often minimal as investors figure out their next move. This could explain why Bitcoin has been trading in a very tight range below $60,000 since then. However, if bulls continue to dominate, regaining support above $60,000 could be the next stop.

As spot Bitcoin outflows continue and BTC miners sell a significant portion of their holdings, this decline could continue. In that case, Bitcoin price could fall back toward $50,000.

Featured image created with Dall.E, chart from Tradingview.com