Bitcoin’s price saw a sudden drop on August 14, falling by 5% despite what was initially seen as positive news from the United States inflation data. The cryptocurrency initially surged to nearly $62,000 following the latest Consumer Price Index (CPI) print, which came in lower than expected, typically a bullish signal for risk assets like Bitcoin. However, the rally was short-lived, with BTC/USD quickly losing over $3,000 within just over an hour, plummeting below $59,000.
Traders Cautious Amid Market Volatility
The swift reversal caught many traders off guard, though some, like Daan Crypto Trades, had previously warned of erratic price movements around the release of US macroeconomic data. “CPI Coming in mostly at estimates. Pretty good and doubt this impact markets much in the end,” he commented, suggesting that the markets might have been set to move in their own direction regardless of the CPI results.
BTC/USD 1-hour chart. Source: TradingView
According to the latest data from CME Group’s FedWatch Tool, market participants still expect a small interest rate cut from the Federal Reserve at its next meeting in September. The Kobeissi Letter, a trading resource, noted that while lower headline inflation points to upcoming Fed rate cuts, these cuts could also lead to a resurgence in inflation in certain categories.
Outlook Remains Bearish, Potential Further Drops Expected
Looking ahead, some traders are eyeing lower levels as potential entry points for long positions. Roman, a popular trader on X (formerly Twitter), suggested that Bitcoin could drop another 10% from its current levels, possibly reaching $55,000 before stabilizing. He pointed out the lack of strong volume to support higher prices, indicating bearish price action.
Source: The Kobeissi Letter
“My plan has remained unchanged for the last week. Not seeing strength here for continuation upwards as we have bearish price action (low vol + price up),” Roman explained, underscoring the cautious sentiment among traders as Bitcoin faces ongoing market challenges.
