- Sky-high CPI data couldn’t stop Bitcoin from trimming yesterday’s gains
- On the other hand, stocks and treasury yields moved north
What appeared like a bright recovery rally earlier turned into a false flag this Friday? Bitcoin logged 11% losses on the day after topping out at $35,703. This is the second major correction in the week for the BTC/USD pair after Monday. It was a drop to the $28,705 price level then. Today Bitcoin corrected down to $31,280 against the greenback.
This comes amid overall weak market sentiment triggered by the Chinese miner selloff as a response to the crackdowns on BTC mining, and trading in China.
The benchmark cryptocurrency has been testing the $28,700 – $31,700 support range for more than a month now. After dropping more than 50% from the $65,000 high on May 19. Bulls attempted several recoveries beyond the crucial $41,000 but the Chinese miner exodus has been too much of a FUD to overcome.
Even the news of Paraguay joining El Salvador in legalizing Bitcoin could keep BTC/USD rates churning higher.
CPI Pushed Stocks, Treasury Yields Higher
If Paraguay couldn’t so couldn’t last month’s US Consumer Price Index (CPI) data. Last month’s high CPI readings were at a record high (after 13 years) but they did little in driving investors into BTC/USD markets. Gold, another popular inflation hedge also saw a massive selloff post-June 10.
It is quite a contrasting scenario to see inflation-oriented value preservers dip lower when not just US CPI, the latest US core price inflation numbers have registered the largest jump in 30 years.
Generally, Bitcoin and gold bulls welcome such developments and see the mas solid reasons to enter new positions. Nonetheless, as it can be seen from the charts the buying response has been tepid to zero.
It’s not that investors took the back seat on risk aversion. In fact, stocks across the board (S&P 500, Dow Jones, Nasdaq) are on a weekly winning streak. Thanks to the $1 trillion infrastructure deal closed by President Joe Biden yesterday.
Treasury yields haven’t stayed back either. 10-year and 30-year Treasury yields moved up north on the back of May CPI numbers and the latest core PCE inflation numbers.
Bitcoin Selloff Continues
As mentioned above the Chinese mining selloff is too much of a dominant factor in Bitcoin markets. And this explains why despite BTC’s inflation tackling qualities, investors have chosen to remain away from plugging fresh capital in the cryptocurrency.
On the 4-hours chart, the MACD indicator is on the verge of resuming its bearish cycle which implies that Bitcoin’s bearishness will continue a bit more longer. This is corroborated by an inverse cup and handle formation which is a classic bearish indication.
In the stated case, there is a high probability of Bitcoin retesting the $29,000 level again.