Bitcoin likely to pull back after another failed breakout, CPI beats expectations at 3.7%


  • Bitcoin price has dropped almost 5% this week, inspiring a wave of bearish sentiment across the market.
  • Santiment's mid-term trends shows CPI, inflation and bear market searches are trending.
  • With key support from $26,400-$26,500 still holding, BTC could recover to breach the key resistance around the $27,300-$27,400 zone.  
  • A sudden reversal could catch investors off-guard, liquidating many bears, considering the overall bearish market sentiment.

Bitcoin (BTC) price is likely to pull back, if history is enough to go by, leaving bear sellers to suffer after multiple failed breakouts.

Meanwhile, the US Consumer Price Index (CPI) coming in above expectations has inspired a fresh wave of bearish sentiment across the market. The report on the Thursday CPI reading has reignited speculations for another interest-rate hike by the US Federal Reserve (Fed). It came above the 3.6% estimate, recording 3.7% YoY, an unchanged reading from August.

The data has catalyzed the US Dollar rally and sent risk assets, including Bitcoin, further down. With inflation proving sticky, there is a renewed risk-off mood from investors, with Gold, stocks, and Bitcoin likely to tumble. 

Also Read: Bitcoin price to record a squeeze, analysts say as BTC open interest hits multi-month high at $12.37 billion

Cryptocurrency prices FAQs

How do new token launches or listings affect cryptocurrency prices?

Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.

How do hacks affect cryptocurrency prices?

A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.

How do macroeconomic releases and events affect cryptocurrency prices?

Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.

How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?

Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.

Daily Digest Market Movers: Bitcoin extends losses as market sentiment sours 

With the week’s 5% dip, bearish sentiment continues to span the expanse of the market, with Santiment's mid-term trends showing Consumer Price Index (CPI), inflation and bear market searches are trending as investors look for possible implications.

Santiment mid-term trends

Technical Analysis: Bitcoin price coils up for a squeeze

Bitcoin (BTC) price has dropped almost 5% so far in the week, moving from the Sunday high of $28,095 to the current price of $26,719. It remains below the equilibrium of a market range measured from $25,166 to $31,804.

 if history repeats, Bitcoin price could record yet another failed breakout, pulling back in a surprise move that could catch the bears off guard. Short sellers would suffer if such a scenario plays out. With the key support holding, the move could see BTC break past the key resistance ranging from $27,300 to $27,400.

In a highly bullish case, the gains could extend past the equilibrium level of $28,485. A decisive move above this level would increase the odds for an extended move above the $30,000 psychological level.

The RSI is already deviating from its initial southbound move below the 50 level, suggesting bulls are already in play.  In a previous article, we reported an anticipated squeeze, presented as a rapid change in the price of an asset thanks to the forced closure of positions. With short sellers closing their positions in panic, their countering buying pressure is likely to provide hindwinds for the surge.

BTC/USDT 1-day chart

On the flip side, the position of the Relative Strength Index (RSI) below 50 suggests a continued slump that could see Bitcoin price break below the key support extending from $26,400 and $26,500. A break and close below this level could send BTC to the depths of the $26,000 psychological level. In the dire case, the losses could extrapolate to the bottom of the market range at around $25,166.

Also Read: What can crypto traders expect from Thursday’s US CPI?

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Three reasons why Chainlink could rally

Three reasons why Chainlink could rally

Chainlink has noted accumulation by large wallet investors for the past two weeks. Nearly $110 million in LINK has been withdrawn from exchanges in this time period. LINK sustained above $13 on Sunday, extending gains by nearly 1%. 

More Chainlink News

Ripple holds on to double-digit gains, highest in top 20 cryptocurrencies

Ripple holds on to double-digit gains, highest in top 20 cryptocurrencies

Ripple rallied over 19% in the past seven days per CoinGecko data. The altcoin broke past resistance at $0.50 on the one-year anniversary of Judge Analisa Torres’ XRP ruling. 

More Ripple News

Bitcoin breaks $60,000 as market anticipates re-election of pro-crypto former President Trump

Bitcoin breaks $60,000 as market anticipates re-election of pro-crypto former President Trump

Bitcoin extended gains post the shooting at the rally of US Presidential candidate Donald Trump. The former President is a pro-crypto candidate, and a report by Fortune shows that Trump’s chances of winning the race increased after the Saturday events.

More Bitcoin News

Ethereum ETF launch could push Ether to new all-time high, on one condition

Ethereum ETF launch could push Ether to new all-time high, on one condition

Ethereum (ETH) traders are watching two key events closely: the anticipated approval of the Spot Ether ETF and the activities of whales, the large wallet investors holding ETH. An analyst has predicted that the odds of Spot Ether ETF is 72.7% this week. 

More Ethereum News

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin (BTC) stabilized around the $57,000 mark this week, while the German Government persists in transferring Bitcoin to exchanges. Concurrently, US spot Bitcoin ETFs have recorded inflows. On-chain analytics indicate that whales are accumulating BTC during dips, potentially foreshadowing an imminent rally in the days ahead.

 

Read full analysis

BTC

ETH

XRP