Bitcoin Holds $26,800 as US Inflation Data Beats Expectations
Bitcoin (BTC) is hovering around the crucial $26,800 level ahead of the Wall Street open on October 12, as US inflation data continues to exceed expectations. The latest data revealed that inflation remains persistent, surprising the markets. The Consumer Price Index (CPI) for September came in at 3.7% year-on-year, higher than the expected 3.6%. The CPI excluding food and energy matched forecasts at 4.1%. This data puts pressure on monetary policy and the Federal Reserve.
Tight Spot for Monetary Policy and Fed
The Kobeissi Letter highlighted the dilemma faced by monetary policy and the Federal Reserve due to rising inflation across different indices. With inflation exceeding expectations, it questions how the Fed can cut interest rates anytime soon. The expectation of “higher for longer” interest rates in the US is likely to create pressure on risk assets, including cryptocurrencies.
FedWatch Tool Shows Minimal Chances of Rate Hike
Despite the CPI data, there is a minimal chance of the Federal Reserve increasing interest rates further at its next meeting on November 1, according to CME Group’s FedWatch Tool.
Lack of Upside Momentum for Bitcoin
Market participants are cautious about a potential upside for Bitcoin in the short term. Traders are closely watching the $26,800 level as a crucial zone that needs to be flipped to support for bulls.
Lack of Bid Liquidity Above $24,750
Monitoring resource Material Indicators revealed a lack of bid liquidity above $24,750, which has been an important level in the past two quarters.
Macro Outlook and Bitcoin
Co-founder Keith Alan expressed skepticism about the macro outlook, stating that he believes bad economic conditions will lead to a negative impact on BTC price. Trading firm QCP Capital also commented on the downward trajectory of Bitcoin and Ether, despite potential bullish factors in Q4.
Hot Take: Bitcoin Faces Uncertainty Amidst Rising Inflation
Bitcoin is grappling with the $26,800 level as US inflation data continues to surpass expectations. The persistently high inflation puts pressure on monetary policy and raises questions about the Federal Reserve’s ability to cut interest rates. Market participants are cautious about a potential upside for Bitcoin in the short term, while bid liquidity remains low above $24,750. The macro outlook remains uncertain, with concerns that bad economic conditions will negatively impact BTC price. As inflation rises, Bitcoin faces challenges in maintaining its position as a risk asset.
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