Bitcoin price makes unexpected turn after CPI, sentiment deteriorates

Bitcoin (BTC) started fluctuating after the release of new US inflation data. However, it did not become nearly as volatile as expected and the price did not fluctuate in the direction as hoped.

Bitcoin touched close to $31,000 shortly after the inflation numbers, then made some big swings, then started to fall. Bitcoin reached around $30,200 last night and is currently battling the $30,400 mark, which may have turned back into resistance.

Bitcoin is trying to push through at the time of writing, topping out at $30,430 on Binance and $27,300 on Bitvavo. This puts the bitcoin price down 1.3% today. The total market capitalization is $590 billion and the dominance is 49.9%. The Fear & Greed Index comes out at 57 (Greed).

CPI lower than expected, BTC still falls

The US consumer price index (CPI) was released yesterday, causing some volatility. Inflation figures were 3% lower than the expected 3.1% and core inflation was also lower than the expected 5% at 4.9%.

It caused the US dollar index (DXY) to fall sharply and many stock markets turned green. However, Bitcoin fell unexpectedly and as a result, sentiment deteriorated slightly again.

Yet bitcoin does not sink too deeply, the price is actually still in the same range. Investors may want to wait for the response of the Federal Reserve first. However, the Fed will not announce that until July 26, after the Federal Open Market Committee (FOMC) meeting. Currently, 92% of the market expects the Fed to raise rates by 0.25%.

Meanwhile, today we are presented with even more macroeconomic data in the form of the producer price index (PPI). The markets are only expected to react less strongly to this.

US government Bitcoin on the move

A possible explanation for the deteriorated sentiment may be other news from the US. The US government moved another part of its huge bitcoin pile. This raises fears that a large amount of BTC will be dumped, namely about 9,800 BTC worth about $300 million.

CryptoQuant reminds us that we also saw this happen in March. Then market sentiment also dropped and many became short positions open. This caused a short dip in the price, but then led to a short squeeze, which caused the price to rise sharply.

Bitcoin Miners Sell After New Difficulty Record

At the beginning of this week, we already warned that the bitcoin mining difficulty would rise sharply this week. On Tuesday night, the difficulty increased by 6.45% to a new all-time high of 53.91 T. However, it seems that miners are choosing to cash in on their supplies. They have sent 1,959 BTC to exchanges, according to analyst IT Tech. That may lower the price somewhat.

Bitcoin price has been stuck for three weeks

In any case, we do not see any major price movements for the time being. Bitcoin has been stuck in the same tight price range just above $30,000 for over three weeks now.

The market hoped that the CPI numbers might act as a catalyst for the price to break out of this range, but that turned out not to be the case.

Analysts therefore fear that it may take a little longer before bitcoin finally breaks out of this zone.

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