The Bitcoin price it briefly dipped below $60,000 for the first time since September. The price drop occurred after release Inflation data for the Consumer Price Index (CPI).which was higher than expected. This macro data and factors such as the US presidential election are creating uncertainty in the market, leading to a bearish outlook for the flagship cryptocurrency.
Why the price of Bitcoin dropped below $60,000
After the announcement was published, the price of Bitcoin fell below $60,000 CPI inflation data in the USA. The CPI showed that inflation in the US reached 2.4% in September, above expectations. This represented a bearish outlook for BTC, suggesting that the Fed’s 50 basis point (bps) rate cut may not occur at the November FOMC meeting as expected.
Traders were already pricing in a subsequent 50 basis point rate cut Fed Chairman Jerome Powell dovish statement after the interest rate cut at the September FOMC meeting. However, recent events such as CPI inflation data show that this may not happen. A rate cut is typically bullish for Bitcoin as more liquidity is likely to flow into the cryptocurrency ecosystem as a result of such monetary easing policies.
It is worth mentioning that CPI data is not the only macro event that caused bearish sentiment among investors. Last week’s U.S. jobs report also raised questions about the U.S. economy.
The data on non-agricultural wages turned out to be much higher than expected, leading market participants to question the authenticity of the data and whether the labor market is as mighty as Powell previously suggested.
Meanwhile, the Fed’s September minutes showed that an interest rate cut in November is far from certain. The committee said at the meeting that it would decide on further action based on incoming data, such as the CPI data released yesterday.
Which is why Bitcoin price responds to market uncertainty as investors remain cautious about allocating so much capital to its flagship cryptocurrency. These investors are withdrawing their BTC holdings, fearing that prices will fall in the low term. Crypto analyst Ali Martinez revealed that Bitcoin whales have sold or distributed approximately 30,000 BTC ($1.83 billion) in the last 72 hours.
US presidential elections and tensions in the Middle East
The US presidential elections AND growing tensions in the Middle East have also contributed to market uncertainty and a bearish outlook for Bitcoin’s price. The market is highly volatile as the election approaches. However, it is worth mentioning that Donald Trump is leading in the polls and is a supporter of cryptocurrencies, which provides bullish prospects for Bitcoin.
Meanwhile, there is a possibility that Israel will attack Iran at some point, which is also happening Bitcoin investors perceptive. Meanwhile, Israel continues to attack Hezbollah forces, which will certainly continue deepen tensions in the Middle East, especially considering Iran supports this militia group.
Bitcoin price has surged impressively above the $60,000 support level. At the time of writing, BTC is trading around $60,700, down over the past 24 hours, according to data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
