Bitcoin (BTC) made another significant plunge yesterday. We already warned that the release of US inflation data could cause significant volatility, especially if they come in higher than expected. That was also the case, the consumer price index (CPI) comes in at 8.3%, while 8.1% was expected. This raises fears that the Federal Reserve will raise interest rates sharply again. We will hear that on September 21.
Immediately after the CPI publication, the bitcoin price dropped from $22,650 to a low of $20,050, but even briefly fell below $20,000 on some exchanges. There, bitcoin found support and recovered slightly overnight. The BTC price is at $20,260 at the time of writing on KuCoin and €20,300 on Bitvavo.
This means that the BTC price is today no less than 9.6% in the minus. The trading volume increased by 8.9% in the past 24 hours. Total market capitalization is $389 billion and dominance at $39.0%. The Fear & Greed Index comes in at 27:
Bitcoin Fear and Greed Index is 27 – Fear
Current price: $20,183 pic.twitter.com/HrppZvxHAq— Bitcoin Fear and Greed Index (@BitcoinFear) September 14, 2022
Bitcoin news from yesterday
Will bitcoin hold up or will we see new lows?
Yesterday, our analysts described that bitcoin may be on the brink of a trend reversal as the price approached 0.618 Fibonacci. That indeed turned out to be the top and after CPI the decline started. Again, the level where BTC has to hold is the 0.618 Fibonacci. It is at 61.8% of the previous gain and comes in around USD 20,165.
For the time being, the price manages to hold up above, but if bitcoin falls through this, there is a good chance that we will have new lows will see below $18,500. There is also no bullish divergence in the relative strength index (RSI), which may indicate that the decline is too strong. If you have any questions about this analysis, feel free to ask them in our Discord surroundings.
Bitcoin hash rate and mining difficulty set new records
The Bitcoin hash rate and mining difficulty are important indicators that often go hand in hand. The hash rate is a good indicator of network security and represents the computing power miners provide. The mining difficulty indicates the level of difficulty for solving the complex cryptographic puzzles to process transactions.
The chart below shows that the hash rate has reached a new all-time high last week, despite the poor price development. As a result, the difficulty level also rose to a new record last night. According to BTC.com was an increase of 3.45% at an average hash rate of 229.39 EH/s to a record of 32.05 T. That is a sign that the security of the network is in good shape, but also that miners are still further come under pressure, partly due to the falling price.
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