Bitcoin (BTC) continued its downward trend on Sept. 11, with prices falling below $56,000 despite positive U.S. inflation data. As Wall Street opened, BTC/USD recorded losses of over 3%, marking a significant decline in the crypto market.

CPI Data Fails to Lift Bitcoin

The U.S. Consumer Price Index (CPI) for August, which tracks inflation, showed a 0.2% month-on-month increase and a 2.5% rise year-on-year. This is the smallest 12-month inflation rise since February 2021, easing fears of rising inflation. However, the data failed to inspire confidence among Bitcoin traders, as the price continued to decline, slipping below $56,000.

BTC/USD 1-hour chart. Source: TradingView

The CME Group’s FedWatch Tool reflected expectations for a 0.25% interest rate cut at the Federal Reserve’s Sept. 18 meeting. Despite the increased likelihood of a rate reduction, Bitcoin traders appeared cautious, with popular trader Roman predicting a retest of $55,000.

On-Chain Data Signals Risk-Averse Sentiment

On-chain analytics platform CryptoQuant highlighted that Bitcoin has decoupled from gold, which reached a new all-time high in dollar terms during August. This decoupling typically signals a risk-averse environment, where investors shift to traditional safe-haven assets like gold, while Bitcoin mirrors stock market movements and declines.

US CPI 12-month % change. Source: Bureau of Labor Statistics

CryptoQuant’s report further noted that the weakening of both the U.S. dollar and Bitcoin could indicate broader financial uncertainty. In such periods, investors often flee from riskier assets like Bitcoin and the dollar in favor of more secure options.

Market Outlook

Despite the recent losses, longer-term Bitcoin traders remain cautiously optimistic. Some experts suggest that BTC/USD is still holding support on weekly charts, offering hope for a recovery. However, the overall market sentiment remains uncertain as Bitcoin continues to struggle amid broader financial stress.