As the United States inflation data continues to outperform expectations, Bitcoin is struggling to maintain the crucial $26,800 support level, just ahead of the Wall Street opening on October 12.
CPI Data Surprises Market
CPI data for September, reported by the U.S. Bureau of Labor Statistics, revealed a year-on-year increase of 3.7%, slightly surpassing the anticipated 3.6%. Excluding food and energy, the figure stood at 4.1%, in line with forecasts. This persistent inflation trend has added to the growing concerns in the market.
Fed target rate probabilities chart. Source: CME Group
The current situation has raised questions about the Federal Reserve’s monetary policy. With the Producer Price Index (PPI) and Personal Consumption Expenditures (PCE) both indicating rising inflation, the ability of the Fed to cut interest rates in the near future is under scrutiny. The notion of “higher for longer” interest rates in the U.S. could lead to increased pressure on risk assets, including cryptocurrencies.
Fed’s Next Moves
Despite CPI data exceeding expectations, the likelihood of the Federal Reserve raising rates further at the upcoming Federal Open Market Committee (FOMC) meeting on November 1 remains minimal at just 7.4%, according to CME Group’s FedWatch Tool.
BTC/USD 1-hour chart. Source: TradingView
Bitcoin market participants are cautious, with little optimism for an immediate upside. Traders are closely monitoring the $26,800 level, hoping for it to become a solid support zone. Material Indicators suggests limited bid liquidity beyond $24,750, a key level from the past two quarters.
Market sentiment leans toward a bearish outlook for Bitcoin. The prevailing sentiment is that macroeconomic factors, alongside geopolitical tensions, make it challenging for Bitcoin to experience a significant upward movement. With the “good = bad” equation, as one commentator put it, many are cautious about Bitcoin’s prospects in the short term.
As Bitcoin navigates these complex market dynamics, traders are eyeing the key support levels around 25-26k and the resistance levels at 29-30k as critical indicators to determine the cryptocurrency’s next trend. The downward trajectory of Bitcoin and other major altcoins like Ether continues despite various potential bullish factors in Q4, according to trading firm QCP Capital.