Bitcoin Soars Over $58K, May Hit $90K Before You Know It

On Thursday morning, the price of Bitcoin (BTC) reached a peak of over $58,000 as the Producer Price Index (PPI) report for August showed that inflation continues to moderate towards the Federal Reserve's 2% target.

The U.S. Department of Labor reported that the Producer Price Index (PPI) rose by 0.2% from July to August, and by 1.7% year-over-year, marking the smallest increase since February and lower than the 2.1% annual growth rate in July.

The report further solidified expectations for a rate cut at next week's Federal Open Market Committee meeting, although the possibility of a 50 basis point cut has dropped from 40% last week to 13%.

Senior Market Analyst at Trade Nation, David Morrison, noted: "The total possibility of rate cuts by the end of the year is 100 basis points, and it is now unlikely to reach 125 basis points."

"Amid all the rate cut talk, it's worth remembering that the Fed continues to shrink its balance sheet, thereby quietly tightening monetary policy.

Given that this policy is at odds with rate cuts, can the Fed announce that it will now stop this policy?"

Employment data also showed that the number of first-time claims for unemployment benefits rose to 230,000 last week, an increase of 2,000 from the previous week, exceeding economists' expectations.

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Data provided by TradingView showed that Bitcoin soared to $58,587 after the PPI announcement, but then fell back below $58,000 as traders who bought during the recent dip below $53,000 took profits.

According to market analyst Kevin Svenson, the pullbacks and consolidations that Bitcoin has experienced since late February are not unusual, as they occur in every bull market cycle.

In an update on YouTube, he said: "People may just be overly sensitive to the market and have high expectations for life after this bull market."

"Because everyone is overexposed, every time there is a drop, all die-hard cryptocurrency enthusiasts become very concerned, even though in the past cycles, 2017 saw many drops of 40%."

Technically, Svenson said that the daily chart shows Bitcoin is forming a descending broadening wedge, which is generally considered a bullish indicator.

According to the current setup, he said that if the descending broadening wedge pattern plays out as he expects, BTC could rise by 63% from current levels.

"The descending broadening wedge... well, it's still here.

It's still working, nothing has changed...

If we do let the recovery move forward, then the target will also be based on the descending broadening wedge," he said.

"There are several ways to get the target of the descending broadening wedge, by measuring from the top to the bottom of the pattern, or from the widest point of the wedge to get the target."

Svenson said: "Now, from the highest point to the lowest point of the wedge... the target has become approximately $92,000."

"From the widest point of the wedge so far, this target is about $89,000.

So, using both methods, the common target is between $89,000 and $92,000."

Market analyst Jelle agrees with Svenson's analysis and said that Bitcoin will "reach $90,000 before you know it."