Key Points
- Bitcoin’s price briefly fell below $68,000 due to higher than expected US CPI data, causing concerns of a local top.
- Increased Bitcoin demand, particularly from Chinese institutional investors, is pushing prices higher even before the halving event.
Bitcoin’s price saw a slight dip on Wednesday, falling below $68,000 to hit a 24-hour low of approximately $67,568.
However, the leading cryptocurrency bounced back during the New York trading session, trading at around $68,668.
This volatility in the crypto market led to the liquidation of more than $253 million, with the majority ($186 million) being long traders.
Impact of US CPI Data on Crypto Market
The unexpected drop in crypto prices, which also affected gold prices, was linked to the release of the Consumer Price Index (CPI) data by the United States Bureau of Labor Statistics.
The US CPI data for both the monthly and yearly change was higher than expected, dispelling the anticipation of a rate cut by June.
This suggests that the Federal Reserve has yet to fully control inflation.
Previously, Federal Reserve Chair Jerome Powell had indicated that rate cuts could start as early as June, following a lower inflation rate.
Karen Dynan, a professor of economics at Harvard University, noted a change in sentiment, observing that the Federal Reserve might be reconsidering its stance due to sustained inflation.
Increasing Bitcoin Demand Ahead of Halving
There has been a surge in Bitcoin demand, particularly from Chinese institutional investors, pushing prices higher even before the actual halving event.
These investors have been trying to gain Bitcoin exposure through spot BTC ETF applications in Hong Kong.
The anticipation of spot BTC ETF approval in Hong Kong is expected to continue driving prices higher due to the impending demand vs supply shock.
Interestingly, the volume for the spot Bitcoin ETFs in the United States over the past few months has been consistent with the volume recorded during the 2020/2021 bull run.
With the fourth Bitcoin halving less than two weeks away, Bitcoin’s price is expected to continue experiencing significant volatility.
However, some analysts have suggested that the Bitcoin halving event could potentially be a sell-the-news event.
Bitcoin’s price has struggled to exceed the recently achieved all-time high (ATH) of around $74k over the past few weeks.
According to a technical Bitcoin price analysis by Peter Brandt, Bitcoin’s price might have reached a local top, despite the overall bullish outlook.
If Bitcoin’s price continues to decline against the US dollar in the coming days, it could find solid support between $60k and $61k.
However, the short-term bearish sentiment for Bitcoin’s price could be invalidated if the coin consistently closes above $72k in the coming days.
