On Wednesday, the market witnessed a surprising turn of events as Bitcoin (BTC) dipped below $27,000, negating the initial positive impact of the U.S. inflation data on the cryptocurrency. Coinbase’s BTC/USD trading pair dropped to $26,800 before recovering slightly, leaving BTC hovering around $27,400, marking a 1.8% decline in the past 24 hours.
The release of April’s Consumer Price Index (CPI) seemed to initially fuel Bitcoin’s rise. According to the Bureau of Labor Statistics’ report, the annual inflation rate decreased to 4.9% from 5% in March—a smaller reduction than the expected 5%. In conjunction with this, the CPI rose 0.4% on a monthly basis, meeting expectations.
However, despite the encouraging data, Bitcoin’s gains were short-lived. Coinglass data revealed liquidations of over $47 million in BTC long positions within an hour, pushing prices lower. The long squeezes were contrasted by only $5 million in BTC short position liquidations during the same time frame.
Meanwhile, the second-largest cryptocurrency by market capitalization, Ether (ETH), experienced a similar trend. It recorded a 1% drop within the past 24 hours, currently trading around $1,860. The CoinDesk Market Index (CMI), an indicator of the overall crypto market performance, showed a 1% decline in the same period.
Equity markets also exhibited mixed results, with the S&P 500 down by 0.1% and the tech-heavy Nasdaq gaining 0.5%. At the same time, the Dow Jones Industrial Average (DJIA) faced a 0.6% decline.
Experts assert that the sell-off in BTC prices may be partially driven by the correlation with stock market fluctuations. Lucas Outumuro, Head of Research at blockchain analytics firm IntoTheBlock, shared his thoughts with CoinDesk, highlighting the simultaneous drop in stocks as a possible reason behind the unexpected downturn in BTC prices.
Given these recent events, it’s clear that predicting the future of cryptocurrency markets remains a challenging endeavor, even with seemingly positive occurrences such as the release of favorable inflation data. Nonetheless, it’s crucial for investors to continually monitor market trends and developments, while keeping a level-headed approach to any unexpected movements on the horizon.
Source: Coindesk
