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Bitcoin (BTC) was holding onto the crucial $26,800 level ahead of the Wall Street opening on Oct. 12, as inflation data from the United States continued to exceed expectations.
BTC/USD 1-hour chart. Source: TradingView
BTC price responds as CPI exceeds forecasts
Data from Cointelegraph Markets Pro and TradingView indicated that BTC price fluctuations remained subdued following two-week lows observed the previous day on Oct. 11.
This stability was attributed to U.S. macroeconomic data indicating ongoing inflation that continues to surprise the markets.
On Oct. 12, the Consumer Price Index (CPI) for September reinforced this trend, registering at 3.7% year-on-year compared to the anticipated 3.6%. Excluding food and energy, the figure was 4.1%, aligning with predictions.
“The all items index rose 3.7 percent for the 12 months ending September, matching the increase for the 12 months ending in August,” an official announcement from the U.S. Bureau of Labor Statistics stated.
“The all items less food and energy index increased 4.1 percent over the last 12 months. The energy index fell 0.5 percent for the 12 months ending September, while the food index rose 3.7 percent over the past year.”
In response, financial analysis platform The Kobeissi Letter highlighted the challenging position in which monetary policy — and the Federal Reserve — currently finds itself.
“We have PCE and PPI inflation rising with CPI inflation exceeding expectations,” it noted on X (formerly Twitter).
“How can the Fed reduce interest rates anytime soon?”
The notion of “higher for longer” regarding U.S. interest rates is widely anticipated to exert pressure on risk assets, including cryptocurrencies.
Following the CPI release, the likelihood of the Fed increasing rates further at the upcoming Federal Open Market Committee (FOMC) meeting on Nov. 1 remained low at just 7.4%, according to data from CME Group’s FedWatch Tool.
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Fed target rate probabilities chart. Source: CME Group
Analyst on Bitcoin vs. macro: “Bad = bad”
Focusing on Bitcoin itself, already cautious market participants had little incentive to anticipate a short-term rebound.
Related: BTC price rally in doubt? Bitcoin young supply echoes 2022 bear market
Well-known trader Skew continued to highlight $26,800 as the critical area for bulls to convert into support.
$BTC 4H
CPI later today will show how LTF structure develops
clear 4H demand area here & $26.8K remains significant for control
If buyers can reclaim & maintain $26.8K will look for some form of 4H EMA trend test or reclaim
remaining more cautious until confirmations pic.twitter.com/58BKDZyLBj— Skew Δ (@52kskew) October 12, 2023
Monitoring tool Material Indicators pointed out a lack of bid liquidity significantly above $24,750, a crucial level from the previous two quarters.
Looking at #BTCUSDT on #FireCharts < 30 mins ahead of today's Economic Reports 3 things stand out:
1. Bid liquidity laddered down to the LL at $24,750
2. Yellow halted their TWAP sell strategy
3. Purple Whales have been selling pic.twitter.com/4cant18F4o— Material Indicators (@MI_Algos) October 12, 2023
“It’s been a while since we’ve discussed whether good = good or good = bad for BTC price,” co-founder Keith Alan remarked in commentary on the macro situation ahead of CPI.
“I’m no economist, but based on yesterday’s reports, the overall economic outlook and geopolitical tensions, I’m going to go with bad = bad.”
Furthermore, trading firm QCP Capital described an “unabated” downward trend for Bitcoin and the largest altcoin, Ether (ETH), occurring despite various potential bullish factors in Q4.
“Hopefully the relative underperformance of BTC and ETH to the upside now also means their beta is lower to the downside as well, should CPI come in stronger than expected,” it stated in a market update earlier that day.
“Otherwise, we continue monitoring the key levels of 25-26k on the downside, and 29-30k on the topside as critical to determine the next trend.”
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making a choice.
