By ForexTime
At the time of writing, Bitcoin is surging over 4% and sliced well beyond the $70k psychological level.
The “OG” crypto is now trading at its highest levels since mid-March when it posted a record high of $73,850.
Perhaps more importantly for bulls (those hoping that prices will go higher), Bitcoin appears to have conquered the stubborn $71,400 resistance region which had capped prices in late March.
Free Reports:
Bitcoin’s advance has lifted up many other cryptocurrencies along with it.
Within the 11 different crypto CFDs offered by FXTM:
Today’s surge is also translating into a couple of cryptos testing key resistance levels:
The above-listed price movements come at the onset of a massive week for global financial markets.
The latest US inflation data is due this Wednesday, April 10th.
This monthly inflation data release out of the world’s largest economy often causes trillions of dollars to move across global financial markets.
Traders and investors decipher what the latest CPI figures would mean for the Fed’s interest rates outlook – arguably the primary focus of markets worldwide.
Here’s how cryptos have generally fared, as measured by the Bloomberg Galaxy Crypto Index, the same week as the US CPI announcement:
If the upward momentum currently evident across the crypto complex can persist …
that would only extend this trend of cryptos posting weekly advances when US inflation data is released.
To be clear, it’s not a straight path upwards for cryptos towards a weekly advance.
Each of those CPI weeks so far this year has seen 2 different days of declines for the Bloomberg Galaxy Crypto Index.
Such volatility ensures that crypto CFDs traders still have opportunities this week to potentially benefit from both rising and falling prices.
In trading, “hedging” means protecting against potential losses by making offsetting investments.
It’s like buying insurance for your investments to minimize risks from price changes.
And we know that Gold is a popularly-traded product on CPI release days.
The precious metal tends to post a larger-than-usual move on the days that the US consumer price index (CPI) is released.
Bullion has, on average, seen a $25 move between its highest prices and its lowest price on any given trading day so far in 2024.
This chart below shows the larger-than-average moves (white bars that extend above the red line) for gold on the 3 days that has seen CPI announcements so far this year.
However, the official CPI number can and do surprise markets, and may go against the trader’s position.
In order to potentially offset such losses,
Solana has been shown to offer a strong hedge against gold on CPI days.
Note how Solana has fared in comparison to Gold on US CPI release days so far this year:
Gold = -1.12%
Solana = +1.46%
Gold = -1.33%
Solana = +0.67%
Gold = +0.22%
Solana = -2.09%
In other words … Solana and Gold have moved in OPPOSITE directions on every single US CPI release days so far in 2024.
Of the 11 crypto CFDs offered by FXTM, this “inverse relationship” (when asset A goes up, asset B goes down, and vice versa) is strongest between Solana and Gold on US CPI announcement days.
This perhaps sets up Solana as a suitable “hedge” against Gold for this upcoming CPI release due Wednesday, April 10th, provided this “inverse relationship” holds strong once more this week.
And trading is risky at all times!
Thus, it remains to be seen whether the 3 above-listed behaviours exhibited by Crypto CFDs will prove true once again this week.
Regardless, CPI announcements tend to inject massive bouts of volatility across global financial markets.
And that in turn may result in outsized trading opportunities in Crypto CFDs.
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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