Why Did Bitcoin Price Drop Today? BTC traders brace for $23K retest
Bitcoin (BTC) headed toward $23,000 on February 3, after a night of losses erased the bull’s recent gains.
Dollar rebound halts cryptofest
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD hit a low of $23,329 on Bitstamp.
The pair had come off another run above the $24,000 mark at the February 2 Wall Street open, with buyers unable to sustain momentum amid macro market volatility.
In classic style for interest rate announcements by the US Federal Reserve, an initial move was soon countered, with Bitcoin returning to its previous position.
Matters worsened thanks to a rebound in US dollar strength, with the US Dollar Index (DXY) posting an eye-popping pullback, which began consolidating on the day.
“When the DXY dollar finds support and starts bouncing hard, we will see pullbacks on our crypto bags,” popular trader Crypto Tony warned.
“Time to pay attention.”
Cointelegraph Contributor Michaël van de Poppe eyes a 102 level for DXY to trigger inverse-correlated declines across risk assets.
“I expect that it is likely that DXY will retest what was support and reach overhead resistance again,” Matthew Dixon, founder and CEO of crypto valuation platform Evai, continued in his own analysis.
“This would be consistent with my reverse expectations of Btc and Crypto moving down a touch before a final ‘blow off’ high (not much higher imo).”
The CPI raises new concerns
Macro-induced price pressure may persist until February, some believe.
Related: Bitcoin Bulls Must Regain These 2 Levels As ‘Death Cross’ Still Looms
In its latest market update sent to Telegram channel subscribers, trading firm QCP Capital drew special attention to the next US Consumer Price Index (CPI), due to be published on February 14.
“After the FOMC, we have a bunch of second-level data releases, including the important ISM services and NFP. However, the decision will be Valentine’s Day CPI – and we believe there are upside risks to this release, it said.
“First, Cleveland Fed’s Inflation Nowcast shows >0.6% print for January, although it has overstated inflation in recent months.”
Due to a change in the way the CPI is calibrated, QCP suspected that upcoming numbers in 2023 may be higher than the market expects. Whether psychological or not, the net effect could disappoint crypto bulls.
“In Europe, a similar reweighting has led to an increase in the January CPI released this week. Therefore, we expect downside risks to materialize from here – either at this meeting or after the next CPI release,” QCP added.
According to data from CME Group’s FedWatch Tool, consensus on the next rate hike remained firm in mid-March, and was identical to February one at 25 basis points.
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
