Bitcoin Reacts to U.S. Inflation Data
As the Nov. 14 Wall Street open approached, Bitcoin (BTC) aimed for $37,000 following the release of the latest United States inflation data. The Consumer Price Index (CPI) came in 0.1% below market forecasts both year-on-year and month-on-month, offering a pleasant surprise for Bitcoin and stocks. The annual change was 3.2% versus 4.0% for core CPI, according to an official press release from the U.S. Bureau of Labor Statistics.
Compared with October, where CPI overshot versus market consensus, stocks immediately reacted positively at the Wall Street open, with the S&P 500 up 1.5% on the day.
Despite the positive reaction from stocks, Bitcoin only had a modest response, remaining rangebound but revisiting an intraday low before rising toward $37,000.
Bitcoin Market Analysis and Predictions
Market composition analysis by Material Indicators revealed that liquidity was overall thin, with retail investors increasing BTC exposure while whales remained quiet on exchanges.
James Van Straten, a research and data analyst at CryptoSlate, emphasized that corrections within the broader uptrend were normal and healthy in bull markets. He suggested that Bitcoin could see up to 20% drawdowns as part of profit-taking or liquidations.
Filbfilb, co-founder of trading suite DecenTrader, also predicted that Bitcoin could experience a significant drawdown before the April 2024 block subsidy halving event.
Hot Take: BTC Price Volatility and Market Corrections
The reaction to U.S. inflation data has shown that both Bitcoin and stocks are influenced by economic indicators. Despite modest reactions from Bitcoin, it remains in a rangebound position while waiting for further market developments. The predictions from analysts regarding potential drawdowns highlight the importance of understanding market corrections as a normal part of any financial cycle.
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