Bitcoin (BTC) was trading close to the $29,500 mark on August 10 as investors awaited the release of the United States Consumer Price Index (CPI). The CPI is an important factor for the Federal Reserve when determining interest rates. In June, the CPI was at its lowest point in two years, and there were expectations of another drop in July.
The volatility leading up to the CPI release caused Bitcoin’s price action to stabilize, according to data from Cointelegraph Markets Pro and TradingView. Traders were uncertain about whether the CPI would rise or fall, and how the markets would react. Michaël van de Poppe, founder and CEO of trading firm Eight, expressed the possibility of a rise in CPI, which would put pressure on risk assets such as cryptocurrencies that rely on looser Fed policy.
JPMorgan Chase also warned of a potential increase in CPI values due to factors like rising energy and food prices. Economist Mohamed El-Erian mentioned these uncertainties and the persistence of service inflation in his analysis. Despite the uncertainty, popular trader Mark Cullen predicted more downside for Bitcoin and cryptoassets, citing the failure to hold above $29,500 as a reason for a potential short position.
However, the market’s expectations regarding rate hikes leaned towards a pause at the next Federal Open Market Committee (FOMC) meeting in September. The odds of a pause were above 85% at the time of writing, according to CME Group’s FedWatch Tool.
Meanwhile, monitoring resource Material Indicators observed liquidity conditions on the Binance BTC/USD order book. It revealed the potential for rapid downside movement due to a lack of bid support below the current spot price. The commentary emphasized the importance of liquidity levels and their impact on price movements.
It is important to note that this article does not provide investment advice or recommendations. Investing in cryptocurrencies involves risks, and readers should conduct their own research before making any decisions.
In conclusion, Bitcoin’s price was hovering around $29,500 ahead of the release of the US CPI. Traders were cautious about the potential impact of CPI on the markets, with expectations pointing towards a possible drop. However, uncertainties surrounding energy and food prices and service inflation could cause CPI to rise. Despite the uncertainty, market expectations leaned towards a pause in rate hikes at the next FOMC meeting. Additionally, the lack of bid support below the spot price could lead to quick downside movements. As always, investors should conduct thorough research before making any investment decisions.
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