Bitcoin soars more than 10% this week, new uptrend in sight?

Investing.com - Bitcoin is continuing the rebound from Monday's sub-$40,000 low, with the cryptocurrency trading at $43,500 at the time of writing, following a high of $44,305 last night. On that peak, BTC/USD was up more than 11.6% from the $39.677 low earlier in the week.

As for Bitcoin's gains yesterday, a study of the very short-term charts shows that the cryptocurrency displayed a bullish reaction to the US CPI release.

US inflation figures boost Bitcoin

Indeed, although above the official consensus, US inflation remained below what many observers feared, which was a relief.

This reduces the risk of the Fed becoming too hawkish too quickly in the eyes of the market, contrary to last week's Fed Minutes which suggested a sharp hawkish turn.

Recall that bitcoin is seen by many investors as a hedge against rapid inflation, and the price has climbed since the Fed began printing money and pursuing ultra-loose monetary policies since the coronavirus hit in March 2020.

BTC/USD sends conflicting technical signals

From a technical point of view, the daily chart of Bitcoin allows us to detect some contradictory signals. On the positive side, the rebound in Bitcoin this week confirms the importance of the $40,000 support, and also corresponds to a rebound on a long term uptrend line visible since October 2020.

Regarding the importance of the $40,000 mark, Jurrien Timmer, Head of Global Macro at Fidelity Investments, yesterday called it a "pivotal support" area, saying that Bitcoin is "technically oversold.

On the negative side, a cross of the 50-day moving average below the 200-day moving average appears imminent. Such a cross is universally recognised as a powerful bearish signal called a "death cross".

The last time such a crossover occurred was in June 2020, and a month later Bitcoin had dropped to its 2021 low.

Furthermore, there are many obstacles in the cryptocurrency's path should the rebound continue, including a downtrend line visible since the October 2021 high, and currently located around $46,000, ahead of the $50-52,000 area which is to be seen as major resistance whose breach would begin to more significantly improve the profile of BTC/USD in daily data.

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Investors buy into Bitcoin's long-term low

Finally, it seems interesting to note that on Monday, when Bitcoin tested $40,000 and then quickly rebounded, outflows from exchange platforms to crypto wallets reached nearly 30,000 BTC according to CryptoQuant data, which was a high not seen since September 10, four months ago.

The outflow of BTC funds from exchanges is a bullish indication, as it means that investors are taking their Bitcoins off the market for long-term storage in private wallets. This supports the view that Bitcoin bottomed out on Monday, and that we should perhaps expect a return to a sustained rise in the cryptocurrency.