Cryptocurrency markets are having a tense week this week. Bitcoin (BTC), the world’s largest cryptocurrency, is trading on concerns about US macroeconomic data. Because of the anxiety, it dropped 1% on Wednesday and fell below $ 62,000. Investors are closely following the Consumer Price Index (CPI) data, which will be announced on Wednesday. Expectations are generally positive. But analysts warn that unexpectedly high inflation figures could drop the Bitcoin price even further. Long-term analysts, on the other hand, argue that the increase in global liquidity and the potential decrease in inflation may trigger the Bitcoin price upwards.
Bitcoin price declines on US CPI expectations
Bitcoin (BTC), the world’s largest cryptocurrency, experienced a slight depreciation. It fell 1%, mainly due to concerns about US macroeconomic data. Because it fell below $ 62,000. More than $100 million worth of BTC long positions have been liquidated in the last 24 hours. HODL15Capital shared insights into market trends by examining the last ten on-chain activity in Bitcoin. While sales by small investors continued, investors holding 100 BTC or more made net sales for the first time.
HODL15Capital suggests that this may be an indication that hedge funds are shorting Bitcoin in anticipation of the Consumer Price Index (CPI) figures, which will be announced at 15:30 ET on Wednesday, to be negative. In this scenario, funds short covering their positions can lead to a sudden rise in BTC prices.
What are the expectations?
Investors are closely following April inflation data. An improvement is expected in the Consumer Price Index (CPI) compared to March. But an unexpectedly high CPI figure will be critical, according to a report by Zerocap. Because there is a possibility that the Bitcoin price will drop by 13% and drop to $ 53,000. Some analyst opinions are as follows:
- Kyle Rodda (Capital.com): “Market sentiment depends on today’s US CPI report. “While expectations are positive, if the lowest core CPI rate in over 3 years materialises, a larger bearish surprise will be required to offset concerns about sticky and re-engaged inflation.”
- Will Woo (Bitcoin Analyst): Woo observed an upward trend in global liquidity. In particular, it predicts a price increase before October 2024. This signals that there may be a historic period for Bitcoin until 2025.
Net and whale activity is high
Bitcoin price is trading at $61,915 and its market cap is $1.2 trillion. However, network activity and whale mobility show a concerning situation. According to Santiment, as network activity decreases, whales are also moving away from large transactions. Outages and withdrawal freezes on platforms like Coinbase exacerbate this situation. Santiment suggests that this could create enough FUD (fear, uncertainty and doubt) to lead to a recovery in the near future.
In the short term, Bitcoin price continues to fluctuate based on US CPI data and overall market risk appetite. Long-term analysts argue that a decrease in inflation and an increase in global liquidity could trigger the Bitcoin price upwards.
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