In the US session, Bitcoin (BTC) failed to stop the decline and fell below $59,000, hitting an intraday low of $58,930. The decline was mainly attributed to the higher-than-expected US CPI data in September, which showed that the inflation rate rose by 2.4%, exceeding the market expectation of 2.3%.
However, stronger-than-expected inflation data raised concerns that the Federal Reserve might take a hawkish stance, potentially delaying a rate cut.
The uncertainty dampened sentiment and led to a broader sell-off in the cryptocurrency market, further depressing Bitcoin prices.
Another factor weighing on Bitcoin (BTC) is the recent surge in regulatory action targeting the cryptocurrency space. Lawsuits by the U.S. Securities and Exchange Commission and market manipulation charges against several market makers by the Department of Justice have heightened investor anxiety.
Additionally, comments from SEC Chairman Gary Gensler, who described the cryptocurrency industry as being filled with “scammers,” further fueled the negative sentiment surrounding BTC.
The impact of rising inflation on Bitcoin price and market sentiment
In the United States, the latest Consumer Price Index (CPI) data showed that inflation rose to 2.4% in September, exceeding market expectations of 2.3%.
The monthly CPI inflation rate was 0.2%, consistent with previous months, but the annual inflation rate was the lowest since February 2021.
At the same time, the core CPI, which excludes more volatile food and energy prices, also rose 3.3% year-on-year.
Bitcoin prices fell more than 2% after the CPI data was released, falling below $59,000 in the past 24 hours. The decline led to a broad sell-off in the cryptocurrency market.
In light of these developments, markets are now pricing in an 84% chance of a 25 basis point rate cut by the Fed at its upcoming November meeting, a departure from previous expectations for a larger cut.
Furthermore, the U.S. 10-year Treasury yield climbed to 4.073%, while the U.S. dollar index fell 0.10% to $102.595, reflecting the current financial environment.
Therefore, an unexpected rise in inflation could lead to increased volatility in the Bitcoin market and could further depress its price. If the Fed takes a more hawkish stance, Bitcoin may struggle to regain momentum and could potentially fall further below $60,000.
Regulatory pressure affects Bitcoin price and market sentiment
Recent regulatory actions in the U.S. have put downward pressure on bitcoin prices. The U.S. Department of Justice charged four market makers and a dozen individuals with market manipulation, while SEC Chairman Gary Gensler criticized the cryptocurrency industry as rife with fraud.
He noted that many key figures were either facing legal trouble or already in jail.
As a result, market sentiment around Bitcoin has turned negative. Analysts such as Lekker’s Thompson believe that regulatory scrutiny could keep Bitcoin’s price stagnant until the U.S. election in November.
Increasing legal pressure and tough talk from regulators could limit any significant price recovery in the short term.
Key Takeaways:
Legal Pressure: Recent allegations and regulatory comments have soured market sentiment.
Range-bound Trading: Analysts predict that Bitcoin will remain range-bound until there is more regulatory clarity.
Short-term Outlook: Bitcoin is likely to face continued selling pressure, limiting its upside potential in the near term.
Bitcoin rebounds 0.82% but faces strong resistance at $61,000
Bitcoin (BTC/USD) is trading around $60,150, up 0.82% on the day, hitting a low of $59,530. The price remains below the 50-day exponential moving average (EMA) at $62,080, indicating strong resistance.
The recent rebound suggests bullish momentum in the short term but it remains capped by the $60,740 resistance level. A decisive break above this resistance could target the next resistances at $61,240 and $61,985.
Bitcoin price chart – Source: Tradingview
However, short-term support lies at $59,540, followed by deeper levels of $58,880 and $58,350. The relative strength index (RSI) has risen back to 40, indicating neutral momentum, but it remains below the critical 50 mark. A break below $59,540 could spark further selling that could push the price back to $58,880.
Currently, Bitcoin’s short-term outlook is cautiously bearish below $61,240, but a break above $61,240 could turn the sentiment to bullish.
Key insights:
Support Break: The immediate support at $59,540 is crucial; a break below this level could result in further declines.
Resistance: A break above $60,740 could open the doors for further gains.
RSI Indicator: Neutral momentum, but if the RSI rises above 50, there is upside potential.
