Bitcoin (BTC) was floating around $18,000 when Wall Street opened on Jan. 12, even as US inflation continued to ease.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
Bitcoin traders remain cautious post-CPI
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD experienced predictable volatility around the release of December consumer price index (CPI) data.
The first such release in 2023, the event preceded the start of trading on Wall Street, with Bitcoin briefly trading higher before returning to threaten a collapse below $18,000.
In doing so, the largest cryptocurrency copied the behavior of a month earlier, with resistance at $18,500 remaining untested.
CPI came in at 6.5% year over year, in line with most predictions. Accordingly, according to CME Group’s FedWatch tool, markets were betting on a smaller 0.25% rate hike from the Federal Reserve at the February meeting of its Federal Open Market Committee (FOMC).
Fed target rate probability chart. Source: CME Group
Despite the continuing trend of falling inflation in the USA, traders had to wait and see
“Not every pump means the bottom is in and a reversal is taking place,” popular trader and analyst Crypto Tony warned in part of a Twitter update.
“We enter a bull market when we see higher highs and higher lows in bitcoin that we don’t have yet.”
Cast your vote now!
Michaël van de Poppe, founder and CEO of trading firm Eight, also suggested that Bitcoin could see a temporary drop next before joining a broader recovery in risky assets based on the CPI data
“Another month of falling inflation, now lower than November 2021. Even negative numbers month to month,” he tweeted.
“Fuel for 2-4 month relief period for markets, but likely near-term correction for Bitcoin soon.”
A subsequent post boosted the chances of a “likely” move lower for BTC/USD, potentially towards $17,700.
Annotated BTC/USD chart. Source: Michael van de Poppe/Twitter
Sticky inflation sees flat stocks open
Meanwhile, stocks that already priced in the CPI result remained subdued in the hour following the open.
Related: 13% of BTC supply returns to profitability as Bitcoin experiences “massive” accumulation
At the time of writing, the S&P 500 and Nasdaq Composite Indexes were both up 0.2% on the day.
Popular analyst Tedtalksmacro noted that core inflation remained “sticky” which could potentially dampen sentiment despite the overall trend.
“Clear trend is that inflation has been tamed + we have yet to see the lagged impact of Fed hikes,” he continued.
“I have no advantage trading this chop, but I do have an advantage if I see the trend in the data early…dips are for buying in Q1+Q2, shorts are -EV for me in this environment.”
Crypto markets similarly kept liquidations of short positions at bay on the day, with Bitcoin liquidating $33 million worth of positions on Jan. 12 along with $21 million worth of long positions, data from Coinglass showed.
Bitcoin Liquidation Chart. Source: coin jar
The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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