US Inflation Has Slowed Down. Why Has Bitcoin Fallen Below $60,000?
Despite upbeat inflation data, Bitcoin has fallen 5% in the last 24 hours.
In July, annual inflation fell to 2.9%. The data exceeded experts' expectations and showed a slowdown in inflation. On a monthly basis, the CPI index increased by 0.2%. This indicator coincided with the expectations of experts. This data will allow the Fed to start easing monetary policy. Nevertheless, the central bank will still wait for employment data before starting to cut interest rates.
Data from the CME FedWatch tool shows that the probability of a 50 basis point interest rate cut is 50%.
What's happening to Bitcoin
The cryptocurrency market historically reacts to US inflation data. This time they turned out to be favorable for cryptocurrencies. And yet, Bitcoin behaved unexpectedly.
Bitcoin's reaction to July inflation data
In the first hours after the publication of inflation data, Bitcoin behaved in a subdued manner. The Bitcoin price remained at the level of $61,200. However, the next trading day the asset began with a fall to $57,900. Over the course of the day, the price fell by 5%.
From a technical point of view, Bitcoin failed to consolidate above the resistance level of $61,500, which led to the fall.
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The real reason for Bitcoin's fall
Bitcoin's subdued reaction could be the result of other inflation data. For the month, the rent index rose 0.36%. And the housing cost index rose 0.4%. These indicators are once again the center of attention.
But the further fall of Bitcoin was not related to inflation data, but to the actions of the U.S. government. Last night, the US government sold 10,000 Bitcoins worth almost $600 million previously confiscated from Silk Road, causing a 5% drop in the market.
The drop in the Bitcoin price also coincided with an outflow of funds from the Bitcoin ETFs: there was a net outflow of $81 million on Wednesday, ending a two-day positive streak. Some market participants who bought Bitcoin ETFs in the first half of the year are now selling them, which is also seen as a negative factor for the overall market.
Investor excitement about the upcoming November elections is also having a negative impact on the entire market. While earlier they were encouraged by the emergence of a candidate in the lead with progressive views on cryptocurrencies, after the Democratic candidate entered the race and started leading in a number of key states, the mood of investors changed. And this is already being reflected in the price dynamics.
Bitcoin price prediction
Bitcoin has fallen by 5% in the last 24 hours. The asset failed to hold above $60,000 and tested the $58,000 level before forming a daily low near $57,900. The asset is currently trading near $58,300. The nearest resistance level is at $58,800. The key resistance is at $59,500. If the bulls can overcome it, Bitcoin will continue to grow to the key levels of $60,000, $61,500, $63,500 in the near term.
On the negative side, Bitcoin may not reach the nearest resistance level and then the price may fall to the support levels of $58,000, $57,500, $56,500, $55,500, and $55,000 in the near term.
Experts' opinions
It is not the first time we hear from experts that Bitcoin will soon reach the $1 million mark. They gave different reasons. However, a well-known expert and crypto investor Fred Krueger presented quite bold conditions for Bitcoin to reach 1 million dollars. He compared Bitcoin to a huge call option on inflation and emphasized that the asset could stay in the $150,000-300,000 range for the next four years if inflation is minimal. But if, according to him, the Fed cuts interest rates and the government prints more money, inflation could jump, as could the Bitcoin price.
Earlier, investment firm Bernstein said in a report that Bitcoin will rise to $200,000 by the end of 2025 and $1 million by 2033. Meanwhile, analyst Bit Paine gave another reason why Bitcoin will reach $1 million dollars. He cites Bitcoin mining, in which 750,000 Bitcoins will be mined in five years. And this should cause the Bitcoin price to rise to $1 million dollars.
Other experts have analyzed the historical movement of Bitcoin price, current technical data and concluded that by 2025 the Bitcoin price could be $164,000.
Markus Thielen of 10x Research cited just one reason that will push Bitcoin upward. He emphasized the importance of monitoring and analyzing cryptocurrency cash flows, which provide crucial insights into market conditions that can affect Bitcoin's movement. One of the important indicators, he considers, the recent actions of stablecoin issuers, who released $2, 8 billion into the market this week. According to him, this is a favorable sign indicating the interest of institutional investors to inject capital into cryptocurrencies. Which means that the price of Bitcoin will rise in the near future.
Crypto analyst Miles Deutscher saw another sign of bullishness. He observed that the current market conditions are reminiscent of the multi-month consolidation of 2023. Based on the sharp decline in retail interest and other data, Deutscher suggested that this phase is already winding down.
Some are still making pessimistic predictions, assuring that the Bitcoin price will drop to $20,000 amid the recent movements of the RSI index.
