Crypto and equity markets tumbled slightly on August 9 as traders got a little stiff ahead of tomorrow’s Consumer Price Index (CPI). Details of the print will shed light on whether the Central Bank’s aggressive interest rate hikes are effective in curbing collapsing inflation, and this could influence the size of future hikes.
Earlier this week, Tesla CEO Elon Musk indicated that July data would reflect the U.S. reaching a peak in inflation and that any slowdown would be “mild to moderate.” The consensus is now that July data will be lower than the record 9.1% seen in June. Energy prices (oil, natural gas) fell sharply in July, and the central bank is hopeful that previous back-to-back increases of 0.75 basis points will combat rising prices in other parts of the economy.
As usual, Bitcoin (BTC), Ethereum (ETH) and most altcoins retreated as traders reduce risk ahead of CPI. BTC price dropped to $22,800, while Ether corrected to $1,670. The argument for traders taking refuge in stablecoins makes sense, but from a technical analysis perspective, today’s pullback is simply a lower support test after last week’s latest support resistance, and big assets like ETH and BTC continue. to trade within their multi-week ranges.
According to independent market analyst Michaël van de Poppe, the fear of the August 10 CPI “unreasonable” and once the series of retests is complete, BTC price should rise towards $28,000.
#Bitcoin corrected for various reasons.
▫️ (Unfounded) fear among the consumer price index tomorrow.
▫️ Resistance around $24.3K remains resistance.
Expect to see a test around $23-23.2K to hold, so the trend continues.
Another test of resistance -> breakout towards $28K. photo.twitter.com/hqcJ6Ry64c
— Michaël van de Poppe (@CryptoMichNL) August 9, 2022
Adding to the narrative that the current pullback is “expected”, trader @52kskew suggested that BTC’s price action is affected by a “healthy relaxation in the perps” as spot Bitcoin is sold at “logical resistance”.
— Δ (@52kskew) August 9, 2022
The pseudonymous trader Big Smokey explained that the correction in the market is simply “reducing risk from traders waiting for the CPI print this week.”
Just a little risk from traders waiting for this week’s CPI print. Up or down who knows, but some traders seem to be interpreting the recent Fed + post CPI print market performance as a sign that they have become “dovish”. Still fluctuating spots desires personally.
— Big Smokey (@big_smokey1) August 9, 2022
According to Big Smokey, the tendency for traders to “interpret recent statements from the Fed + after the CPI print market performance” as dovish and if this trend holds, the market could bounce if the inflation figures are lower than in June.
DyLeClair’s expert, however, believes that in the grand scheme of things, stocks are in the “late stage of the stock market index” and he suggested that BTC will sweep the lows in the next 6 to 12 months if a “correlation 1.0 event” occurs.
i believe we are in the late stages of a stock market rally (if it hasn’t already)
BTC will not seize bids for a large selloff in the stock market
i have dry powder set aside for correlation to a 1.0 event that will probably happen in the next 6-12 months photo.twitter.com/Fx1iARy8ZO
— Dylan LeClair (@DylanLeClair_) August 9, 2022
The total cryptocurrency market cap is currently $1.09 trillion, and Bitcoin’s dominance rate is 40.5%.
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