TL;DR
- Bitcoin experienced snap volatility after a press release from the Bureau of Labor Statistics indicated that CPI Inflation sours to 3.7% higher than anticipated.
- Before the release, crypto traders were worried that a “hot Consumer Price Index reading” would pressure the market.
Cryptocurrency Market Becomes Bearish After U.S CPI Inflation Press Release
Following the U.S. Bureau of Labor Statistics news regarding the Consumer Price Index, the cryptocurrency sphere is recording higher volatility.
U.S. consumer prices increased more than expected due to higher gasoline costs. The yearly change in the Consumer Price Index suggests a surge in inflation.
“The index for gasoline was the most significant contributor to the monthly all-items increase, accounting for over half of the increase. Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month.“
Part of an Official Press Release from U.S. BLS-Labor Statistics read.
Data from Coinweb Markets and TradingView shows BTC price action edging higher to record the second-day winning streak.
Its daily death cross between the 50 and 200 Moving (Mas), with an expected bearish initial reaction.
Since higher inflation translates to lower demand for riskier assets, this news may impact the price of Bitcoin negatively and potentially push it below $26,000.
A Closer Look at U.S. CPI Inflation Data
The Consumer Price Index (CPI) for August rose to 0.6%, aligning with economist expectations of 0.6% and up from 0.2% in July.
On a year-over-year basis, CPI inflation increased to 3.7%, more than the expected forecast of 3.6%, from 3.2% recorded a month earlier.
Additionally, the core CPI ticked upward to 0.3%, higher than the economist expectations of 0.2% and from a 0.2% recorded a month earlier.
On a year-over-year basis, the core CPI fell to 4.4% from 4.7% in July, aligning with the anticipated economist forecasts.
Before the release, crypto enthusiasts were already predicting that a hot CPI reading might pressure the market—implying that inflation would remain more relentless than earlier hoped.
The unexpected rise in prices may counter hawkish messages from the Federal Reserve.
It may also affect the decision-making of the Federal Open Market Committee, which is scheduled for this coming week.
Higher rates may be on the cards, but these hikes may take a while.
Bitcoin Bid Liquidity Stands at $25,000 and Below
Before the CPI press release, Keith Alan, the co-founder of Onchain monitoring resource material indicators, was hopeful that the BTC price momentum would hold out.
He admits that the strength of Bitcoin’s momentum is fading out after the release. But it’s still strong enough to hold on to the bounce BTC reclaimed last week.
Alan clarifies that much technical resistance will remain above the current mark price range.
It will, however, come in the form of various daily moving averages.
With the incoming Wall Street open, Crypto nerds should brace themselves for a volatile cryptocurrency market.
At the moment, the BTC/USDT lacks a defined trend.
The BTC/USDT order book from Binance shows modest liquidity around the spot price, with more bids around the $25,000 mark.
The question remains whether the strength of Bitcoin’s momentum will hold out in the current short-term bearish market sentiments.
