Inflation undercuts expectations, but Bitcoin remains at risk of fallout from a risk asset “deflationary panic” in Q1 next year, one analyst warns.
Bitcoin (BTC) hit new one-month highs on Dec. 13 as United States inflation data sent a surge of optimism through markets.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
BTC price rebounds aU.S. inflation slows
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $18,105 on Bitstamp after the Consumer Price Index (CPI) print for November came in below expectations.
The readout, dubbed the “most important” of the year, even beat analysts’ expectations on inflation slowing.
November CPI was 7.1% year-on-year, compared to the 7.3% forecast. Month-on-month was 0.1% versus the 0.3% expected.
“The all items index increased 7.1 percent for the 12 months ending November; this was the smallest 12-month increase since the period ending December 2021,” an accompanying press release confirmed.
Bitcoin traders and analysts were unsurprisingly buoyed by the injection of positivity which resulted.
“Massive short squeeze on its way in the market,” popular analytics resource Game of Trades responded in part of a tweet prior to the Wall Street open.
A more conservative reaction came from Il Capo of Crypto, who told followers that he still did not plan BTC exposure despite the gains.
“CPI better than expected, but still very high,” he said.
“Price is testing a massive resistance zone here and forming a lower high. I’m still 100% out of the market.”
Similarly cautious was Fejau, an analyst at crypto research firm, Reflexivity Research, who warned of “deflationary panic” yet to come.
“We now enter the complacent Goldilocks phase of inflation,” he announced.
“Cpi coming down faster than expected is bullish up until it turns into a deflationary panic in Q1 2023. Final low around then then bullish into 2024. Enjoy you long gains but don’t miss the forest from the trees.”
As Cointelegraph reported, the week is set to contain more than just CPI numbers, with the U.S. Federal Reserve due to decide on December’s interest rate hike and Chair Jerome Powell to speak on Dec. 15.
According to CME Group’s FedWatch Tool, consensus was for a lower 50-basis-point hike on the day, with the odds at just under 80% versus 75% at the start of the week.
Fed target rate probabilities chart. Source: CME Group
Binance fears already fade
BTC/USD had meanwhile performed well even before the CPI release, showing no hint of cold feet in the face of fresh panic over events involving largest crypto exchange Binance.
Related: SBF ‘didn’t like’ decentralized Bitcoin — ARK Invest CEO Cathie Wood
Dubbed “FUD” by CEO, Changpeng Zhao, concerns appearing in Reuters and on social media nonetheless sparked an exodus of user funds, which totaled over $500 million in BTC alone over 24 hours
In other events associated with the FTX debacle, the exchange’s former CEO, Sam Bankman-Fried, was arrested in the Bahamas on the day, with the U.S. Securities and Exchange Commission charging him with defrauding FTX users.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Leave a Reply