Bitcoin (BTC) saw weakness around Wednesday’s Wall Street open as markets reacted to key US inflation data.
Key points:
- Bitcoin ignores good news around US inflation figures as it dips below $63,500.
- Fed rate-hike odds cool further as attention now switches to Thursday’s PPI numbers.
- Bitcoin is eroding $63,000 support, the latest market analysis warns.
Bitcoin falls despite US inflation data matching expectations
Data from TradingView showed BTC/USD dropping below $63,500, erasing the day’s gains.
BTC/USD one-hour chart. Source: Cointelegraph/TradingView
US stocks were calm after the July print of the US Consumer Price Index (CPI) matched expectations, at 0.1% month-on-month and 3.4% year-on-year.
“The index for shelter rose 0.1 percent in July, accounting for roughly two-thirds of the monthly all items increase. The index for food also increased 0.1 percent over the month, as the index for food away from home increased 0.3 percent. In contrast, the energy index declined 1.5 percent in July,” an official release from the Bureau of Labor Statistics (BLS) reported.
US CPI 12-month % change. Source: BLS
While not repeating the surprise move to the downside seen in June, CPI inflation avoided injecting volatility into risk assets. Among safe havens, gold remained stable after reaching its highest levels in nine weeks on Tuesday.
Fabian Dori, CIO at Sygnum Bank, put the focus on expectations for future Federal Reserve policy changes. Cooling CPI combines with weak labor-market figures to potentially bolster the case for the Fed avoiding interest-rate hikes — an outcome that would benefit crypto and risk-asset liquidity conditions.
“An in-line CPI print after Friday’s –23k jobs report points to gradual cooling without a recession scare or a fresh hawkish re-pricing. September rate odds should stay roughly stable, leaving the macro backdrop for risk assets largely unchanged,” he said in emailed comments.
The latest data from CME Group’s FedWatch Tool saw 60% odds of the Fed holding rates at the current 3.50-3.75% level at its September meeting — up from 30% a month ago.
Fed target-rate probability comparison for September FOMC meeting (screenshot). Source: CME Group
Thursday provides the week’s second US macro report with potential implications for market volatility in the form of July Producer Price Index (PPI) numbers, which in June followed CPI in coming in below expectations.
“An in-line CPI print does not resolve much after Friday’s payrolls miss. The more interesting detail is that the Bitcoin options market is still charging a material premium for protection” Andrei Grachev, managing partner at DWF Labs, told Cointelegraph. “On the end-August expiry, downside strikes near $60,000 have been costing more than equivalent upside strikes near $70,000.”
“Tomorrow’s PPI is the next check on whether that premium starts to ease,” he added.
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BTC price $63,000 support “progressively weakening”
Discussing BTC price strength, trader and analyst Rekt Capital had more words of caution for Bitcoin bulls. In a post on X, he warned that each bounce from $63,000 was more and more lacking in trajectory.
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“The progressively weakening support at ~$63k (orange) is clear. 6.27% –> 5.83% –> 3.18% –> and now 1.15% thus far,” he commented alongside an explanatory chart, adding:
“At some point the bounces will become so weak that the floor will simply break.”
BTC/USD one-week chart. Source: Rekt Capital on X.com
Rekt Capital previously warned that Bitcoin bear-market history was repeating as its 50-month exponential moving average (EMA), currently at $65,827, had become new resistance.
In an update on Wednesday, Bitfinex Alpha, the research arm of crypto exchange Bitfinex, reiterated the strength of the overhead resistance zone.
“Equities spent the past two weeks setting all-time highs (ATH) while bitcoin met resistance at the same $65,000-65,500 region level six times. Between 5 and 10 August, the market printed six consecutive daily highs above $65,000 but bitcoin has not recorded a single daily close above that level since 26 July,” it noted.
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