Bitcoin Price Slides; Bearish Market Woes Continue to Pile
As traders buckled down for the weekend, Bitcoin prices ushered in Friday’s session rather sluggishly. During European trading hours, Bitcoin stayed slightly around $27,000, displaying signs of weakening ahead of the U.S. consumer price index (CPI) release. However, the price of Bitcoin decreased on Friday after U.S. CPI data revealed that inflation was not abating. Currently, BTC is trading at $27,222.59, a 2.22% drop from yesterday.
U.S. Inflation Aids in the Setback
According to TradingView data, the price of Bitcoin reached its lowest point since May 28 at around $28,528 on Bitstamp. The pair fell in step with the stock markets on June 10, with the S&P 500 and the Nasdaq Composite losing 3.5% and 2.9%, respectively.
Surprised by high consumer prices in the U.S., investors became more concerned about the country’s potential economic slowdown. According to reports, annual inflation in the country hit 8.6%, its highest level since 1981.
Following the news about the Bitcoin price dropping, market commentators quickly pointed out the potential downside for the cryptocurrency. One of these is Crypto Tony, who noted that the price could fall to around $22,000 to $24,000 before it gets too greedy.
Bitcoin Drops After CPI report
According to Decentrader co-founder and CEO Filbfilb, the current environment is similar to that of March 2020, when the COVID-19 crash occurred. He noted that the slow bleed this year was worse than the price declines during that period that led BTC to lows of $3,600.
Despite the data showing that inflation has not peaked, Michael Saylor, the CEO of MicroStrategy, noted that Bitcoin and inflation were not at the same level yet. On the other hand, PlanC, a popular Twitter user, pointed out that the market was still in an oversold situation.
Despite the recent volatility, there is no significant reversal in the Bitcoin price trend anytime soon. As long as it remains correlated to the risk assets it is trading on, it might go much lower. The consumer price index in the U.S. also rose by 0.4% in February, slightly higher than expectations. In the minutes following the release, the price of BTC fell by 1.6%.
Bitcoin is currently trading below its weekly resistance level of $30,500. It is also close to its support level of $29,500. After the selloff in May, BTC fell to around $26,350 and has since been in a range of around $32,000 to $28,650. It is a sign that market participants are still uncertain about the future.
CPI Climbed 8.6%
The U.S. Department of Labor reported that the consumer price index rose 8.6 percent in May, which is higher than the previous month’s 8.3 percent. Economists had expected a reading of 8 percent. The rise in inflation has prompted the Federal Reserve to rapidly increase interest rates, which could cause investors to lose money on risky assets.
There has been negative sentiment surrounding the cryptocurrency market. However, Bitcoin has traded within a tight band of around $28,000 to $31,000 over the past 30 days. Aside from rising interest rates, other factors such as the economic uncertainty caused by Russia’s invasion of Ukraine also contribute to the market’s negative sentiment.
Doubts Over Rate Hikes
The upcoming decisions on interest rates by the Federal Reserve are expected to be the main focus of investors’ attention. The minutes of the Fed’s last meeting, released on June 14, will provide a clearer picture of how policymakers intend to respond to rising inflation.
According to a Twitter account, Daan Crypto Trades, the market will eventually realize that inflation isn’t going away soon and that interest rates will remain low for a long time. It noted that the rise of gold could be an early sign of a new old trend. In a post on the day, the account said that the price of gold could be the main factor influencing the shift in the market.
