CPI Crushes Bitcoin Price Down To $17,900, New Lows Imminent?

Bitcoin lost support at $18,600 and headed lower near its yearly low of $17,900. The cryptocurrency has managed to stop the bleeding at these levels, but the general sentiment in the markets appears to have shifted from suspicious to frightened.

At the time of writing, Bitcoin was trading at $18,300 with a 4% loss in the last 24 hours and a 9% loss in the past week, but it has been rebounding over the past hour. Other major cryptocurrencies have followed the BTC price to the cliff and are posting massive losses on lower time frames, with Cardano and Solana showing the worst performance.

BTC price is volatile on the daily chart. source: BTCUSDT TradingView

Inflation Hasn’t Found Bottom Yet, Will Bitcoin Follow?

Data from Materials Indexes shows a rise in selling pressure from all investors heading into the Consumer Price Index (CPI), the benchmark for US inflation. This measure rose above market expectations, registering 8.2% for September 2022.

As shown in the chart below, from retail to whale press down on bitcoin pricing in the new US Federal Reserve (Fed) rate hike. The financial institution tries to slow inflation by increasing rates and decreasing its balance sheet.

Bitcoin BTC BTCUSDT 2 . Chart
Investors sold the CPI report on lower time frames. Source: Material Indicators

However, today’s CPI reading confirms that inflation is flat and likely will not peak in 2022. This fact combined with positive economic growth metrics in the US will provide the Federal Reserve with support to continue raising interest rates negatively impacting Bitcoin and the market. Cryptocurrencies and traditional finance.

The chart above shows the crypto market’s reaction to aggressive monetary policy from the Federal Reserve, but the older markets responded in a similar fashion. Commenting on BTC Price Action and Inflation, Materials Index Analyst He said:

Inflation may not have peaked, however Fed rate hikes will continue to be strong. 75 basis points in November, 75 basis points likely for the Dec TradFi and Crypto markets is Bearish AF THE BOTTOM NOT EXIST.

Additional data provided by Caleb Franzen indicates that the market is expecting another successive 75 basis points (bps) rally in the upcoming FOMC. As a result, the price of BTC is experiencing high volatility resulting from the intense market sentiment.

Investors seem to be pricing in a hawkish Fed with fewer and fewer opportunities to turn in its direction, despite the massive pressure on global markets. At the time of writing, $17,600 remains strong support and $20,500 critical resistance.

If Bitcoin breaks above or below these levels, traders should expect a new decline or a recovery in the previously lost area. This pressure on global markets will continue as long as inflation trends are on the upside.

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