Bitcoin (BTC) fell below $27,000 on Wednesday midday, reversing a morning jump after the release of mildly encouraging US inflation data.
The BTC/USD trading pair on Coinbase traded as low as $26,800 before regaining ground, according to TradingView data. The largest cryptocurrency by market cap recently traded around $27,400, down more than 4% in the past hour and 1.8% in the past 24 hours.
Coinglass data showed that traders betting on a price shift have liquidated over $47 million in long BTC positions in the past hour versus just over $5 million in short BTC positions. These types of long squeezes tend to push prices lower.
Riyad Carey, research analyst at crypto data company Kaiko, pointed out that there are still concerns about the low liquidity in the markets, given the 2% aggregate market depth of BTC – a metric used to assess liquidity conditions – since the crypto exchange collapse FTX did not recover last November.
It’s “a symptom of illiquidity,” he told CoinDesk.
BTC’s price initially surged after the Consumer Price Index (CPI) report released by the Bureau of Labor Statistics on Wednesday morning showed annual inflation slowing from 5% in March to 4.9% in April and less than forecast 5% slowed down. CPI rose 0.4% monthly, in line with expectations and above 0.1% in March.
Ether (ETH), the second largest cryptocurrency by market cap, followed a similar pattern, falling 1% in the past 24 hours to change hands around $1,860. The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, is down 1% in the last 24 hours.
Stocks were mixed on Wednesday afternoon (ET), with the S&P 500 down 0.1% but the tech-heavy Nasdaq was up 0.5%. The Dow Jones Industrial Average (DJIA) fell 0.6% on the day.
“The sell-off coincided with a fall in stocks, so it could be partly correlational,” Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, told CoinDesk.
UPDATE (10 May 2023, 18:37 UTC): Added Carey comments.
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