Bitcoin drops to support as looming CPI print shakes up crypto and stock markets

Cryptocurrency

Crypto and equities markets took a bit of a tumble on Aug. 9 as traders grew a bit skittish ahead of tomorrow’s Consumer Price Index (CPI) report. The details of the print will shine a light on whether or not the Federal Reserve’s aggressive interest hikes are effective in tamping runaway inflation and it could have an impact on the size of future hikes. 

Earlier in the week, Tesla CEO Elon Musk suggested that July data will reflect the United States reaching peak inflation and that any recession will be “mild to moderate.” Right now the consensus is that July data will be lower than the record-breaking 9.1% figure seen in June. The price of energy commodities (oil, natural gas) noticeably decreased in July and the Fed is hopeful that the previous back to back 0.75 basis-point hikes will combat soaring prices in other parts of the economy.

As is custom, Bitcoin (BTC), Ethereum (ETH) and most altcoins pulled back as traders de-risk ahead of the CPI print. BTC price dropped as low as $22,800, while Ether corrected to $1,670. The rationale that traders are sheltering in stablecoins is sensible, but from a technical analysis point of view, today’s pullback is simply a lower support test after the most recent support-resistance flip of the past week, and large cap assets like ETH and BTC continue to trade within their multi-week ranges.

Traders take shelter until CPI publishes

According to independent market analyst Michaël van de Poppe, the fear surrounding the Aug. 10 CPI is “unwarranted” and once the series of retests is complete, BTC price should rally toward $28,000.

Adding to the narrative that the current pullback is “expected”, trader @52kskew suggested that BTC’s price action is being impacted by a “healthy unwinding in perps” as spot Bitcoin is sold at a “logical resistance.”

Pseudonymous trader Big Smokey explained that the market-wide correction is simply “de-risking from traders awaiting this week’s CPI print.”

According to Big Smokey, the trend of traders “interpreting recent statements from the Fed + post CPI print market performance” as dovish continues and if this trend holds the market could bounce if inflation figures are lower than June.

Analyst DyLeClair, on the other hand, believes that in the grand scheme of things equities are in the “late stages of an equities bear market rally” and he suggested that BTC will sweep swing lows in the next 6 to 12 months if a “correlation 1.0 event” occurs.

The total cryptocurrency market capitalization now stands at $1.09 trillion, and Bitcoin’s dominance rate is 40.5%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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