Bitcoin falls by $36.2K as CPI inflation drops more than forecast.
Bitcoin (BTC) hit a target of $37,000 on Wall Street on November 14, after the latest US inflation data cut expectations.
CPI offers Bitcoin, shares a pleasant surprise
Data from Cointelegraph Markets Pro and TradingView showed that the Consumer Price Index (CPI) reflected inflation in October as BTC price strength returned.
CPI came in 0.1% below market forecasts year-on-year and month-on-month. The annual change was 3.2% versus 4.0% for core CPI.
“The all-goods index rose 3.2 percent for the 12 months to the end of October, down from a 3.7 percent increase in the 12 months to the end of September,” confirmed an official press release from the US Bureau of Labor Statistics.
“The food and energy index, which excludes all ingredients, rose 4.0 percent over the past 12 months, the smallest 12-month change since the end of September 2021.”
Compared to October, when the CPI was only one measure of inflation, the situation was strikingly different from a market consensus perspective. Stocks immediately responded to a tepid Wall Street open, with the S&P 500 up 1.5% on the day.
“This month is the 31st consecutive month with inflation above 3 percent. However, inflation appears to be back on DECLINE,” financial opinion source The Kobeissi Letter wrote in a response.
Kobeisi, who is traditionally skeptical of Fed policy in the current inflationary environment, called the publication a positive outcome.
In line with other recent CPI releases, meanwhile, Bitcoin responded modestly, revisiting intraday lows before rallying to $37,000.
Analyzing market composition, however, on-chain monitoring inputs suggest material indicators of liquidity are generally thin – a key ingredient to support volatility.
He added that with whales trading quieter, retail investors are increasing their exposure to BTC.
“It's no coincidence that the 2 smallest order units are buying,” he commented, alongside a liquid publication of the BTC/USDT order book on Binance, the largest global exchange.
“The reverse fluid around the active trading zone is so thin, whales cannot place large orders without a large slippage. Looking at the small order units on FireCharts CVD BTC pushed BTC higher as support strengthened above $36k.
Analyst: Accept BTC price increases
BTC's price action, about 4% from 18-month highs seen at the start of the month, still surprised market participants, who argued that the commotion in the broader uptrend was not only normal, but appropriate.
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“Bitcoin is already down 4.5% from its peak; bull market corrections are normal and healthy,” said James Van Straten, research and data analyst at crypto insights firm CryptoSlate, to X (formerly Twitter) subscribers that day.
Can see up to 20% discount on withdrawal or liquidation. This is a common occurrence and has been seen in previous cycles.
Van Straten rightly puts CryptoSlate's analysis from November 13th, suggesting deep BTC price corrections are still to come, with BTC/USD up as much as 120% year-to-date.
“It is important to note that market corrections are a normal part of any financial cycle, which contributes to the overall health of the market,” he emphasized.
In an interview with Cointelegraph, Filbfilb, the founder of the DecenTrader trading suite, similarly predicted that Bitcoin could see a major decline before the April 2024 halving event.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
