- Bitcoin (BTC) could fall below the current 25K.
- The latest CPI report shows inflation at 8.6%.
- The 1.0% inflation rise in the previous month confirms the fears.
YEREVAN (CoinChapter.com) – Bitcoin (BTC) plummeted nearly 20% in the previous week, bringing its quarter-to-date losses to 45%. As a result, BTC sat at $25,300 in Monday’s Asian-Pacific session, the token’s lowest value since Jan. 2021, receiving further bearish hints from the May CPI report.
Moreover, as CoinChapter predicted, Bitcoin price action confirmed the Bear Flag by dropping below the formation’s support line.
Bitcoin (BTC) bearish technicals
In detail, the Bear Flag typically occurs after a sharp downward move. It features a period of consolidation between two parallel trendlines that takes the price slightly higher before continuing on a bearish path.
The setup’s estimated drop equals the decline preceding the Flag, i.e., the flagpole, marking BTC’s target price at approximately $20,500.
As of June 13, the flagship crypto held support at the current $25,300 margin. In addition, the ‘oversold’ relative strength index (RSI) could provide an additional boost for crypto. However, should BTC close Monday below the said price, a decline to the Bear Flag target appears likely.
Meanwhile, microeconomic factors support the bearish prediction. The latest consumer price index (CPI) report from the Bureau of Labor Statistics revealed an inflation increase beyond expectations.
CPI report sends further bearish hints
Inflation accelerated further in May, with prices appreciating 8.6% year-over-year, the fastest increase since December 1981. Moreover, the headline CPI grew 1% in May compared to April, while core inflation rose 0.6%. Notably, respective estimates stood at 0.7% and 0.5%.
Like April results, Energy and fuel prices took the lead in the May report. Fuel oil rose 106% year-over-year while posting a 16.9% monthly gain. As a result, energy prices broadly rose 3.9% from a month ago, bringing the annual gain to 34.6%.
Bitcoin price might fall as collateral damage
As CoinChapter reported earlier, the inflation itself and even expectations of higher inflation have a detrimental effect on the economy. Timothy Bowler, a former U.S. Treasury official, and IBA President, underscored the importance of assessing expectations.
If that number keeps going up those that are setting monetary policy will start to notice higher trend inflation expectations getting priced into the system, and that might impact decision-making.asserted the executive.
Meanwhile, the rising CPI evokes aggressive retaliation from the Federal Reserve, such as sharp hikes in interest rates. Higher interest rates, in turn, negatively affect the stock market and, by extension, the BTC market as well, given Bitcoin price correlation with risk-on assets.
Thus, Bitcoin’s integration into the broader economy puts BTC prices at risk of following the stock market down a possible recession path.
The coming quarter will shed more light on Bitcoin’s 2023 trajectory. However, BTC recovery hopes appear rather slim as mid-June if the alpha crypto does not decouple from equities and trade independently.