Bitcoin Falls With Support As Upcoming CPI Release Shakes Cryptocurrency and Stock Markets

Bitcoin Falls With Support As Upcoming CPI Release Shakes Cryptocurrency and Stock Markets

Currency and equity markets fell slightly on August 9, with traders slightly nervous ahead of the Consumer Price Index (CPI) report due on Wednesday. The print data will provide insight into the effectiveness of the Federal Reserve’s aggressive interest rate hikes in driving inflation to reduce runaways and could influence the size of future hikes.

Earlier in the week, Tesla CEO Elon Musk said the July data will show the US is reaching a peak in inflation and that any downturn will take a “small to moderate” trend. Currently, the consensus is that the July data will be lower than the record 9.1% seen in June. The price of petroleum products (petroleum, natural gas) fell significantly in July and the Fed hopes that the previous continuous increases of 0.75 basis points will help to combat the rise in prices in other sectors of the economy.

As usual, Bitcoin (BTC), Ethereum (ETH) and most altcoins pulled back as traders took less risk ahead of the CPI release. BTC price fell as low as $22,800, while Ether corrected to $1,670. The rationale that traders are sheltering in stablecoins makes sense, but from a technical analysis perspective, the August 9 pullback is just a test of lower support after the latest support-resistance reversal over the past week, and large-cap assets such as ETH and BTC continues to trade within its multi-week ranges.

Traders take shelter until CPI is released

According to independent market analyst Michaël van de Poppe, the fear of the August 10 CPI is ” without author and once the iteration series is over, BTC price should approach $28,000.

#Bitcoin is correcting due to several reasons. ▫️ (Unwarranted) Fear Amid Tomorrow’s CPI Data ▫️ Resistance around $24,300 continues as resistance. Expect a test around $23-23,200 to hold, so the trend continues. Another resistance test -> breakout towards $28,000. — Michaël van de Poppe (@CryptoMichNL) August 9, 2022

Adding to the news that the current pullback is expected, trader @52kskew said recommended that a “healthy release of perps” is influencing BTC price action, while spot bitcoin is selling at “logical resistance”.

Continuous healthy BTC perp flow. The current is sold at the logic resistance. — Δ (@52kskew) August 9, 2022

The trader is called Big Smokey Explain that the broader market correction is simply “risk on by traders waiting for this week’s CPI print.”

There is little risk taking from traders waiting for this week’s CPI print. Up or down, who knows, but some traders seem to be interpreting recent Fed statements + market performance after the CPI print as a sign that it has gone dovish. Personally, I still favor long positions. — Big Smokey (@big_smokey1) August 9, 2022.

According to Big Smokey, the tendency of traders to “interpret recent Fed statements as well as market performance after the CPI print” as a dovish view and if this trend continues, the market could rebound if inflation figures lower than in June.

Meanwhile, analyst Dylan LeClair, think that stocks are in the “late stages of a bear market rally in stocks” in the scheme of things and suggested that BTC will open the next six to twelve month lows if a “1.0 correlation event” occurs.

I think we are in the late stages of a bear market rally in equity (if not already). BTC will not be offered during a major stock market crash. I have set aside large sums of money in anticipation of a 1.0 correlation which will likely occur in the next 6 to 12 months. — Dylan LeClair (@DylanLeClair_) August 9, 2022.

The total capitalization of the cryptocurrency market now stands at $1.09 trillion, and the dominance rate of bitcoin is 40.5%.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of All investments and transactions involve risk. You should do your own research before making a decision.

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