Bitcoin (BTC) was hovering around the crucial $26,800 mark as Wall Street opened on October 12th, amidst positive US inflation data. BTC price volatility remained relatively low after reaching two-week lows on October 11th, following the release of US macroeconomic data that revealed higher-than-expected inflation rates.
The September print of the Consumer Price Index (CPI) further confirmed the trend, reporting a year-on-year increase of 3.7% compared to the expected 3.6%. Excluding food and energy, the CPI was at 4.1%, matching forecasts. The US Bureau of Labor Statistics confirmed the increase in an official press release, stating that the all items index had risen by 3.7% for the past 12 months, and the all items less food and energy index had increased by 4.1% during the same period.
The Kobeissi Letter, a financial commentary resource, highlighted the difficult position in which the Federal Reserve now found itself. With both the Producer Price Index (PPI) and CPI inflation rising, and CPI inflation above expectations, the question arises: how can the Fed cut interest rates in the near future?
The concept of “higher for longer” regarding US interest rates is expected to put pressure on risk assets, including cryptocurrencies. However, the odds of the Fed raising rates at the next meeting of the Federal Open Market Committee (FOMC) on November 1st were minimal, standing at just 7.4% according to data from CME Group’s FedWatch Tool.
Related Post
In terms of Bitcoin, cautious market participants did not have much reason to expect a return to the upside in the short term. Popular trader Skew identified $26,800 as the level that bulls needed to flip to support. Meanwhile, monitoring resource Material Indicators revealed a lack of bid liquidity above $24,750, a key level from the previous two quarters.
Keith Alan, co-founder of a trading firm, expressed concerns about the macro aspect ahead of CPI. Based on the overall economic outlook, yesterday’s reports, and geopolitical tensions, Alan believed that the situation was leaning towards bad news for Bitcoin. However, it’s worth noting that he acknowledged he was not an economist.
QCP Capital, a trading firm, noted that Bitcoin and Ethereum (ETH) were experiencing an “unabated” downward trajectory, despite several potential bullish factors in the fourth quarter. They hoped that the relatively lower performance to the upside for BTC and ETH would also translate to a lower downside risk if CPI came in stronger than expected. They highlighted the critical levels of 25-26k on the downside and 29-30k on the upside as determinant factors for the next trend.
It’s important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risks, and readers should conduct their own research before making any decisions.
In conclusion, Bitcoin’s price reacted to the release of US inflation data that exceeded expectations, indicating a persistent inflationary trend. The Federal Reserve’s monetary policy is now facing challenges, considering the rising inflation rates. Bitcoin itself faced a cautious market sentiment, with traders looking for confirmation of support levels and bid liquidity. While there were potential bullish factors in the cryptocurrency market, the prevailing sentiment was leaning towards a downward trajectory for Bitcoin and Ethereum. As always, it’s important for readers to conduct their own research and make informed decisions based on their individual circumstances and risk tolerance.
