Bitcoin staged a strong recovery on Wednesday after the latest US inflation report matched market expectations, easing fears of an even more aggressive monetary policy stance from the Federal Reserve.
The world’s largest cryptocurrency climbed around 2.5 percent to $62,410 shortly after the release of May inflation data, recovering earlier losses despite US consumer inflation reaching its highest level in more than three years.
According to the latest figures, headline inflation rose 4.2 percent year-over-year in May, while core inflation increased 2.9 percent annually. Although inflation remains elevated, investors appeared relieved that the data did not exceed forecasts, reducing concerns about additional tightening by the Federal Reserve.
Market analysts noted that traders had already priced in the higher inflation reading. As a result, the absence of a negative surprise encouraged renewed buying in risk assets, including cryptocurrencies.
Bitcoin’s rebound was supported by strong technical support around the $60,000-$62,000 range, an area closely watched by investors after recent market weakness.
However, analysts caution that the latest rally may only represent a temporary relief bounce. Bitcoin continues to trade below several important resistance levels, including short-term moving averages that have capped recent recovery attempts.
Technical indicators also suggest the formation of a bear flag pattern, a setup often associated with further downside risk. If Bitcoin breaks below key support levels, prices could potentially decline toward the $57,800 region in the coming weeks.
On the other hand, a decisive move above current resistance could invalidate the bearish setup and open the door for a broader recovery. In that scenario, Bitcoin may target the $64,000 to $68,000 range later this month.
Investors are now closely watching upcoming economic data and Federal Reserve signals to determine whether the latest rebound marks the beginning of a sustained recovery or merely a pause in the broader downtrend.
