As a seasoned financial analyst with extensive experience in the crypto market, I believe that the current downturn in Bitcoin’s price is being driven primarily by macroeconomic factors. The latest pullback was triggered by rising US consumer inflation expectations, which have increased concern among Federal Reserve members about the need for rate hikes. With key macroeconomic data such as PPI, CPI, and Fed Chair Jerome Powell’s speech due this week, Bitcoin price is likely to remain under pressure and volatile.
The Bitcoin price experienced a decline and reversed previous advances in response to recent economic data, implying that external factors significantly influence Bitcoin’s current pricing trend. Upcoming events such as the release of PPI, CPI, and Federal Reserve Chair Jerome Powell’s speech this week are expected to keep Bitcoin volatile and potentially cause further price fluctuations.
The recent dip in Bitcoin’s price can be attributed to rising anticipated consumer inflation rates. Specifically, the data revealed that people’s expectations for inflation in the next twelve months reached 3.3%, marking a significant increase from the consistent 3% recorded over the past four months. Furthermore, there was a notable uptick in long-term inflation expectations, which now stand at 2.8%, up from 2.6%.
As inflation continues to rise, it is a topic of concern for members of the Federal Open Market Committee. Vice Chairman of the Federal Reserve, Philip Jefferson, and President of the Federal Reserve Bank of Cleveland, Loretta Mester, have offered differing perspectives on inflation and the possibility of rate cuts.
As an analyst, I’d rephrase it this way: The University of Michigan consumer sentiment data release caused Bitcoin’s price to dip below $61,000. This was due to heightened expectations for inflation in the coming year, which rose to 3.5%, and a five-year inflation outlook that climbed from 3.0% to 3.1%.
Crypto Market Saw Over $210 Million Liquidation
According to Coinglass data, over $212 million worth of cryptocurrency positions were closed forcibly in the past 24 hours. Approximately $132 million of these were long positions, while around $80 million belonged to short positions. A significant portion of these liquidations, totaling over $50 million, took place within the last hour.
As an analyst, I’ve noticed some significant trading activity in the cryptocurrency market. Approximately 90,000 traders have been liquidated from their positions, meaning they were forced to sell their cryptocurrencies due to market movements or margin calls. Among these exchanges, Binance stood out with the largest single liquidation order worth around $3.98 million, where someone sold Ethereum (ETH) for Bitcoin (BTC). This strategic move by a seasoned investor or a large-scale trader, often referred to as a “whale,” could indicate various market strategies, such as hedging, profit-taking, or position adjustments. However, further analysis is necessary to fully understand the implications of this transaction.
In just a few hours, the price of Bitcoin dipped by over 1%, reaching a level of $62,566. Its lowest point in the past 24 hours was $60,769, while its highest was $63,422. Given the current trend, it seems plausible that the price may continue to decline and approach the support level at $62,000.
As a seasoned market analyst, I’ve noticed Bitcoin encountering resistance at the 200-EMA on the 4-hour chart, causing me to predict a potential retracement down to around $62,000. The TD Sequential indicator further supports this view with its sell signal. Nonetheless, if the cryptocurrency manages to close above $64,000 in an upcoming candlestick, the bullish trend will likely persist.
Miners Face Capitulation Risk
Bitcooin miners are currently dealing with heightened risk of capitulation following the latest Bitcoin halving that reduced block rewards and modest transaction fees. Volumes in trading have dropped drastically, intensifying the risks for these miners. According to on-chain expert Maartunn, “This situation is apt to put considerable pressure, particularly on less productive miners.”
Based on findings from cryptocurrency research firm Kaiko, the crypto market is expected to encounter increased selling pressure due to Bitcoin miners with substantial holdings of the digital currency experiencing a significant decline in revenue. Kaiko further explained that while higher transaction fees provided some compensation for these firms in April, this advantage has now reversed.
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2024-05-13 22:38