Over the past few days, the price of Bitcoin has been falling because it hasn’t attracted enough buyers around the $98,000 mark. As a result, sellers have been consolidating the price around $95,000. However, the recently released hot Consumer Price Index (CPI) report could change things, as many analysts think that the higher-than-expected inflation might plunge Bitcoin’s price toward $90K this week.
Bitcoin price was surging toward $96K ahead of the CPI report as the market expected a softer inflation data for January. However, the consumer-price index increased by 3% compared to last year, picking up speed from December’s 2.9% rate and exceeding economists’ predictions.
January’s CPI typically shows significant price changes that businesses implement at the start of the year. Therefore, today’s report is a crucial indicator of how well the Federal Reserve is doing in its efforts to control inflation.
The index went up by 0.5% from last month, which is a bit faster than the 0.4% increase in December and higher than the 0.3% increase economists had predicted.
Following the recent CPI report, Bitcoin’s price has taken a sharp downturn. Within just a few minutes, it fell from a high of $96,000 to about $94,000. According to Coinglass, there were nearly $25 million in total Bitcoin liquidations, with buyers quickly closing out $22 million in long positions.
If the CPI is higher than expected, it means inflation isn’t decreasing as hoped. This often causes the Federal Reserve to keep interest rates high or even raise them to manage inflation.
High interest rates usually make the dollar stronger and Treasury bonds more appealing because they offer higher returns. This can lead investors to prefer these safer investments over more volatile ones like cryptocurrencies. As a result, demand for cryptocurrencies like Bitcoin may drop, leading to lower prices.
Analysts are now predicting that this surge in inflation might slow down the recent recovery in the crypto market that started after the crash on February 3rd. It’s expected that Bitcoin’s price could drop to test the $90,000 level this weekend, which could plunge the likelihood of it reaching $100,000 soon.
Bitcoin’s price couldn’t hold steady as it went through a sharp sell-off in the market following CPI news. Sellers led a downtrend as BTC fell below several Fibonacci levels towards $94K. Currently, Bitcoin is priced at $95,304, having dropped 2.1% in the last 24 hours.
The BTC/USDT pair is experiencing resistance around the $96K level as sellers are actively defending that level. If it can stay above this point, it might help buyers push the price up to $98,000 and possibly towards $100K.
On the other hand, if Bitcoin continues to trade below the EMA20 trend line on the 1-hour chart, it could face significant downward pressure, possibly pushing the price below $94,000 and towards a retest of the $91K level.
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