Another week, another Bitcoin pull back. The world’s leading cryptocurrency and the whole market pulled back just ahead of the USA’s inflation report, which should be grim. Global markets are waiting for the report to drop on Wednesday, which could send ripples in every major market.
Bitcoin dropped around 4% early on Tuesday, but managed to recover later. It’s still trading close to the $23,000 line which is good. However, the price suggests investors are not convinced about the market direction, which could be a problem going forward.
The price has been in the $23K range for a while, although that could be traced back to the global financial crisis and the decline of traditional assets. The recent SEC strike at Coinbase, one of the most popular exchange platforms, certainly didn’t help the price.
Investors May Be Spooked
According to experts, the Bitcoin price decline is partly to blame for the disappointing earnings in the past week. Investors are spooked by it resulting in further price drops. It’s not just Bitcoin – Ether’s market capitalization dropped around 5% on Tuesday. That comes in a time where gold and oil prices are on a slight rise.
The world of macroeconomics is eagerly awaiting the upcoming US report on inflation. It should reveal how the Fed’s anti-inflation measures have performed over the last year, with experts predicting an 8.7% year-by-year rise. The core inflation is reportedly up by 6.1%, sending nearly all prices up. Things are not looking good in that regard, and if the report turns out to be negative, crypto prices might take another blow.
Experts say that the market is literally pausing ahead of the CRI report. Every investor is looking to see if the inflation-reducing measures are working. There was a global crypto and stocks selloff ahead of the report, which is common as investors are looking to reduce risk.
If the CRI report goes over the 8.7% projections, crypto prices will decline further. That’s the prediction many experts believe in, as the CME Fed Tool which measures the probability of further rate hikes says a new 75 basis point risk increase is coming.
What Comes After?
Everyone’s hoping that the CRI report sees the number drop or perform according to expectations. This will result in a positive response from the crypto market. But, we wouldn’t hold our breath on that one. The interest rate of the US Treasure is continuing to rise, which obviously suggests economic distress.
It will be interesting to see if Bitcoin reclaims its trendline. Currently, it’s below the 20-day moving average, which signals further possible price drops. The good news is that some analysts, like Michael van de Poppe, believe that the claims of further drops are unwarranted. Van de Poppe tweeted that a correction is coming soon, and that after the report, a retest of the $22K-$23K level is expected. Another test probably awaits after, but once that’s over, Bitcoin is in the clear for a jump toward $28,000.
We certainly hope that’s the case. The crypto market has performed well below expectations this year, and a big price bump can erase all the doubts.