Bitcoin And Ethereum Wick Down Ahead Of CPI


Volatility is suspended in the cryptocurrency market as the price of Bitcoin and Ethereum heads to the downside. The two largest cryptocurrencies react negatively and with volatility to the printing of the US Consumer Price Index (CPI), a measure used to measure inflation.

At the time of writing, Bitcoin (BTC) is trading at $21,600 after rejecting north of $22,000 and losing 4% in the last 24 hours. Ethereum (ETH) is trading at $1,640 with a loss of 6% over the same period after a violent breakdown from a major resistance area near $18,000.

Both cryptocurrencies surprisingly moved to the downside before the CPI was printed. Bitcoin quickly dropped to around $21,300 while Ethereum crashed to $1,640, and the current price action is filling in those negative moves and hinting at further potential declines for the cryptocurrency.

Bitcoin price BTC BTCUSDT
The sudden BTC price move to the downside. source: BTCUSD TradingView

CPI printing exceeds expectations, what does that mean for Bitcoin?

The US CPI came in at 8.3% with the core CPI rising to 6.3%, and expectations for the former came in at 8.1%. In other words, the market was expecting inflation to be below today’s metrics in hopes of easing monetary policy from the US Federal Reserve.

The lower CPI coupled with a slowing economy may have given the financial institution room to relax about raising interest rates. However, market participants are pricing in another 75 basis points for the upcoming FOMC raise.

There is little chance, according to Recent market forecast, more aggressive than the Federal Reserve to raise interest rates by 100 basis points. The financial institution’s current monetary policy has broken the chaos in global markets and risky assets, such as bitcoin.

A 100 basis point rise in the bitcoin price could send the bitcoin price to yearly lows and beyond. Economist and Crypto Analyst Alex Krueger He said The following is about the Consumer Price Index and its impact on the monetary policy of the US Federal Reserve:

Shocking core CPI numbers. The 0.3% MoM error should delay any Fed pivot by at least two months. It should be easy in shorts for a while, BTD can wait.

What can prevent further losses for Bitcoin and Ethereum

The coming days are bound to see more volatility with the CPI reading, market expectations regarding the Fed’s optimism, along with the upcoming Ethereum “merging”. The event that will complete this network’s transition to Proof-of-Stake (PoS), “merging” has caused a lot of noise in the cryptocurrency market.

Part of the market participants expect Ethereum price to operate under the “Buy the rumor, Sell the news” event, others expect a breakout of the resistance around $2000, and others expect the price to continue lower from the current levels.

The latter has led to a spike in bullish liquidity, as traders continue to sell ETH and “squeeze” from larger investors. This could provide ETH with ammunition to reclaim the area around $1,700 as the market heads for a “consolidation.”





Leave a Comment

Your email address will not be published. Required fields are marked *