As an experienced market analyst, I’ve seen my fair share of market fluctuations and trends, especially in the volatile world of cryptocurrencies and equities. With the recent German government sell-off and US CPI data release, it’s important to assess the impact on Bitcoin and other crypto assets.
In spite of the significant selling off by the German government this week, Bitcoin‘s price has remained stable within a narrow range of around $57,000 to $58,000. Contrastingly, Bitcoin experienced a 0.88% decrease after recording new highs in the early hours of trading on Thursday. In the past few weeks, Bitcoin has exhibited a noticeable disconnect from US equities. However, this divergence narrowed during Thursday’s trading sessions. At midday New York time, both the Nasdaq and S&P 500 saw declines of 1.8% and 0.9%, respectively. Initially rising above $59,000 due to positive US inflation news, Bitcoin is now down by 0.6% to $57,500.
Market strategist Joel Kruger from LMAX Group cautions that a potential wider sell-off in the equity market may lead to additional declines for cryptocurrencies.
Currently, the greatest danger to cryptocurrencies stems from the potential for heavily inflated US stocks to experience a significant reversal. While this relationship isn’t definitive, available data hints that a sudden stock market decline might negatively impact crypto assets, if only temporarily.
Bitcoin Index in Extreme Fear
In the face of recent selling waves, the Bitcoin Fear and Greed Index has plummeted into the “extreme fear” territory. This shift occurred when Bitcoin was unable to surpass the significant resistance level at $60,000.
Bitcoin Fear and Greed Index is 25 — FearCurrent price: $57,345
— Bitcoin Fear and Greed Index (@BitcoinFear) July 12, 2024
In a July 11 update on X, trading expert Justin Bennett shared with his 111,000 followers that Bitcoin’s price had again fallen short of hitting $60,000. He pointed out the emergence of a “rising wedge” pattern, suggesting potential price decreases in the near future.
As an analyst, I’d rephrase it this way: In my analysis of the economic data released on Thursday, I noticed that the US Consumer Price Index (CPI) for June showed a noticeable decrease in inflation rates. Specifically, the CPI dropped by 0.1% in May, resulting in an annual rate of 3%. This figure represents the smallest monthly decline in CPI since early 2019.
As an analyst, I’ve observed today’s US CPI report revealing a surprise core inflation rate increase of 3.3%, which was lower than the anticipated 3.5%. Despite this seemingly bullish sign for crypto markets, I believe we experienced a classic “buy the rumor, sell the news” situation.
— Santiment (@santimentfeed) July 11, 2024
I found it intriguing that risk-on assets like cryptocurrencies and equities experienced a decline in value despite the easing inflation trends. According to reports from on-market data provider Santiment, this occurrence turned out to be a “sell-the-news” event. In simpler terms, investors seemed to sell their holdings after the initial positive news about cooling inflation was announced.
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2024-07-12 12:36