Fed estimates US April CPI to rise 3.56%; analysts warn: if it fails to break above the 200-day EMA, Bitcoin will drop to $70,000

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The latest nowcast from the Cleveland Fed shows that the year-on-year CPI growth rate for April will rebound to 3.56%, higher than the 3.3% in March. Meanwhile, Strategy has paused its coin purchases, and STRC falling below par value has weakened institutional buying support. If the technical rising wedge pattern breaks downward, Bitcoin may retest the $70,000 level. (Previous coverage: Bitcoin V-shaped surge to $82,400! Shorts hit hard with $380 million in liquidations, Fear & Greed Index recovers from extreme fear to neutral) (Background: AI Agents need IDs too: The KYA (Know Your Agent) standard war begins, with Visa, Ethereum, and Trulioo racing to take positions) The test Bitcoin faces this week may be tougher than the previous two CPI release days—the Cleveland Fed's latest nowcast estimates that the April year-on-year CPI growth rate will rebound to 3.56%, coupled with the fact that institutional buying pillar MicroStrategy (now renamed Strategy) has paused coin purchases. According to the Cleveland Fed's latest inflation nowcast model, the overall year-on-year CPI growth rate for April is estimated at 3.56%, a significant warming from 3.3% in March; the month-on-month growth rate is estimated at 0.45%, lower than the previous month's 0.9%. Regarding core CPI, the year-on-year growth rate is estimated at 2.56% and the month-on-month rate at 0.21%, roughly in line with the previous 2.6% and 0.2%. This data presents a "mixed" inflation outlook—although the pace of month-on-month growth has slowed and core prices are stable, the rebound in the year-on-year growth rate may still reinforce market expectations that the Fed will find it difficult to cut interest rates quickly in the short term, putting pressure on risk assets like Bitcoin. The official April CPI report will be released on May 12. It is worth noting that Bitcoin has previously strengthened against the trend several times when CPI was high. Taking the March CPI report as an example, the overall year-on-year inflation rate jumped from 2.4% in February to 3.3%, but BTC surged more than 15% after the report was released. One of the reasons behind this was that institutional buying absorbed more than 500% of the newly mined Bitcoin supply at the time, with Strategy accounting for a significant proportion. However, this line of defense is loosening. Strategy has recently paused Bitcoin purchases, and its preferred stock STRC continues to trade below its par value of $100—when STRC falls below par, the efficiency of raising capital by issuing new shares decreases, limiting Strategy's ability to raise new funds for subsequent Bitcoin acquisitions. From a technical perspective, the Bitcoin daily chart is forming a classic Rising Wedge pattern, which is a bearish reversal signal that usually triggers a proportional decline after the price breaks below the lower trend line. As of Sunday, BTC is approaching the wedge convergence point (approximately $84,000, which is also the 200-day EMA position). Analysts point out that if the price breaks downward from here, the downside target is around $70,000. Conversely, if BTC can effectively stand above the convergence point and break through the 200-day EMA, it may trigger a short squeeze, with upside targets in the $90,000 to $95,000 range. Analyst Killa posted on Sunday that large traders may start to reduce risk before the CPI is released, and pointed out that the key support for BTC is $78,600 (weekly opening price). Once this price level is lost, the next downside target will be $74,000–$75,000. He added: "I will watch for liquidity sweeps near this pivot zone as a signal for the next direction." As of the time of writing, Bitcoin is trading at $80,694, nearly flat over 24 hours, as the market holds its breath for Tuesday's inflation data.

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