Bitcoin (BTC) price plunges below $25K following headwinds from growing inflation — what’s ahead?

Key Takeaways:

  • 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.
CPI, inflation, Bitcoin price, BTC,
image from medium.com

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.

Also read: Is it the right time to buy Bitcoin(BTC)? – this exec says yes. 
Bitcoin (BTC) daily price action featuring a Bear Flag. Source: TradingView.com
Bitcoin (BTC) daily price action featuring a Bear Flag. Source: TradingView.com

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.

Also read: Bitcoin whales' BTC holdings hit one-year high as crypto market recovers

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%.

Also read: Bitcoin might just crash all over again due to this eerie factor.
May CPI report reflects a 16% monthly gain in fuel oil price. Source: bls.gov
May CPI report reflects a 16% monthly gain in fuel oil price. Source: bls.gov

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.
Also read: JPMorgan chief issues "hurricane" warning; will Bitcoin stand the challenge?

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.

Bitcoin price (BTC) coupled with the stock market S&P 500 indicator (SPX). Source: TradingView.com
Bitcoin price (BTC) and the stock market S&P 500 indicator (SPX). Source: TradingView.com

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.

close
Bitcoin price, Bitcoin (BTC) price plunges below $25K following headwinds from growing inflation — what’s ahead?

Subscribe Today
for our Weekly Newsletter

Free Weekly Crypto News without the spam.

Related Articles

Our Partners

SwapCoin.com RapidCoin.com ChangeNOW.com Paybis.com