Bitcoin pulls back to $23K as traders await tomorrow's CPI print
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(Kitco News) - Global financial markets experienced a pullback in prices on Tuesday as investors took a step back from trading ahead of tomorrow’s Consumer Price Index (CPI) report.
The details of the report will help provide insight into whether or not the Federal Reserve’s aggressive rate hiking thus far has had any effect on soaring inflation and could influence the size of future hikes moving forward.
Derisking activity by crypto traders resulted in a pullback in the price of Bitcoin to a daily low of $22,876 at which point bullish reinforcements arrived to bid it back above support at $23,000.
BTC/USD 4-hour chart. Source: TradingView
Ethereum, likewise, saw its value plunge 8% off of Monday’s highs to hit a daily low of $1,669 before dip buyers managed to push its price back near support at $1,700.
ETH/USD 4-hour chart. Source: TradingView
As it stands now, the consensus coming from analysts across the markets is that July’s data will be lower than the 9.1% record figure that was seen in June, but it is still projected to be well above the historical average as well as the Fed’s stated target of 2%.
Derisking ahead of the CPI print
The fear that inspired Tuesday’s pullback across the crypto market was addressed by independent market analyst Michaël van de Poppe, who posted the following Tweet detailing the important support and resistance levels to keep an eye on.
Well, #Bitcoin is consolidating here and I hear the craziest numbers flying around.— Michaël van de Poppe (@CryptoMichNL) August 9, 2022
The trend is still upwards, potentially a correction now is taking place due to CPI fears.
?? Hold above $21.3K to continue the trend.
?? Break above $24.5K to continue to $28K. pic.twitter.com/PVG3RDOrjg
A follow-up Tweet from Poppe noted that “the trend is still upwards” despite the current correction and identified $21,300 as the level that needs to be held in order to continue the trend.
Overall, the consensus across crypto Twitter seems to be that the current pullback is the result of derisking behavior ahead of the CPI print, with analysts suggesting that the outlook will become more clear once the report is released on Wednesday.
Just a lil de-risking from traders awaiting this week's CPI print. Up or down who knows, but some traders seem to be interpreting recent statements from the Fed + post CPI print market performance as a sign they've gone "dovish." Still swinging spot longs personally.— Big Smokey (@big_smokey1) August 9, 2022
Altcoins trend lower
Relatively few tokens in the top 200 were shielded from Tuesday’s pullback as crypto traders fled to the safety of stablecoins where they await an update from the Fed.
Daily cryptocurrency market performance. Source: Coin360
The top performers on the day include Spell (SPELL), which climbed 32% to hit a daily high of $0.00159, followed by Celsius (CEL) with a gain of 18% and Reserve Rights (RSR) with a gain of 8.3%.
The overall cryptocurrency market cap now stands at $1.088 trillion, and Bitcoin’s dominance rate is 40.5%.