Bitcoin falls to support as looming CPI print shakes up crypto and stock markets

by · August 9, 2022

Crypto and equity markets fell slightly on August 9 as traders got a little jittery ahead of tomorrow’s Consumer Price Index (CPI) report. The details of the printout will shed light on whether or not the Federal Reserve’s aggressive interest rate hikes are effective in curbing ongoing inflation, and that could have an impact on the size of future hikes.

Earlier this week, Tesla CEO Elon Musk suggested that data from July would reflect the US reaching peak inflation and that any recession would be “mild to moderate”. Right now, the consensus is that the data for July will be lower than the record 9.1% figure seen in June. The price of energy commodities (oil, natural gas) fell noticeably in July, and the Fed hopes that the previous back-to-back increases of 0.75 basis points will combat rising prices in other parts of the economy.

As is customary, Bitcoin (BTC), Ethereum (ETH) and most altcoins retreated as traders de-risked ahead of the CPI print. BTC price fell as low as $22,800, while Ether corrected to $1,670. The rationale for traders hiding in stablecoins makes sense, but from a technical analysis standpoint, today’s pullback is simply a lower support test after the last support-resistance flip in the past week, and majors like ETH and BTC continue to trade within their multi-week ranges.

Traders seek shelter until CPI publishes

According to independent market analyst Michaël van de Poppe, the fear around the August 10 CPI “unjustified” and when the series of tests are completed, the BTC price should increase towards $28,000.

To add to the narrative that the current pullback is “expected,” trader @52kskew proposed that BTC’s price action is being affected by a “healthy liquidation in perps” as spot Bitcoin sells with a “logical resistance.”

Pseudonym trader Big Smokey explained that the market-wide correction is simply “risk-off by traders awaiting this week’s CPI print.”

According to Big Smokey, the trend continues with traders “interpreting recent statements from the Fed + post-CPI print market results” as dovish, and if this trend holds, the market could bounce if inflation numbers are lower than June.

Analyst DyLeClair, on the other hand, mean that stocks in the grand scheme of things are in the “late phase of a bear market equity rally,” and he suggested that BTC will sweep swing lows over the next 6 to 12 months if a “correlation 1.0 event” occurs.

The total cryptocurrency market cap is now $1.09 trillion, and Bitcoin’s dominance rate is 40.5%.

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