The US consumer price index (CPI) was announced today exceeding expectations and equal to 8.3%. This was while it was expected that this index would be announced at 8.1%. The price of Bitcoin reacted to this and suffered a 5% drop, which failed to cross the key resistance level of $22,500.
According to Mihan Blockchain and quoted by Coin Telegraph, with the announcement of US inflation statistics, the price of Bitcoin fell to the range of $21,200 after failing to cross the resistance level of $22,500.
The fall in the price of Bitcoin coincides with the announcement of the CPI index
Today, at 17:00 Tehran time, the consumer price index (CPI) for August was announced. This index was expected to reach 8.1% in continuation of the downward trend. But the month-to-month CPI in August increased by 0.1% compared to July, and finally made the annual CPI equal to 8.3%. The CPI index is one of the most important criteria for the Federal Reserve’s decision to raise interest rates. This incident caused the cryptocurrency market to face a heavy fall in just a few minutes.
Michael Van DePeppe, the CEO and founder of Eight trading company, said yesterday about this index:
Today is an important day for CPI. It is expected that we will see a decrease of 0.1% compared to last month and an increase of 8.1% compared to last year. If the CPI is higher than these values, we are likely to see a strong negative reaction of high-risk assets. Otherwise, we will see a positive reaction from these assets.
The year-on-year CPI index was announced 0.2% higher than expected, but still 0.2% lower than the year-on-year inflation announced in July. The next meeting of the Federal Reserve to set the interest rate is on September 22 (30 Shahrivar). Estimation tools have predicted that we will probably see a 0.75% increase in this rate, while with a lower probability there is still a possibility of a 1% increase in this rate.
Michael van de Poppe (Michaël van de Poppe), founder and CEO of trading company Eight, believes that the amount of declared inflation represents a lot of volatility and temporary price movements:
Remind yourself of this and avoid over-trading. For now, prices have slowed down and some consolidation seems to be taking place.
The strength of the US dollar index (DXY), which traditionally shows a negative correlation with the crypto market, experienced a sudden increase with the announcement of the inflation rate and crossed 109 for the first time since September 9 (18 September).
The status of Ethereum is shaky on the eve of Marj’s update
Before the announcement of the inflation rate of the United States and despite the green status of Bitcoin and most altcoins, the situation of Ethereum was not very favorable, and we read in the previous report of Mihan Blockchain that the reason for this situation is the caution of investors on the eve of the update of the Ethereum platform. But after the announcement of the CPI index and the fall of Bitcoin, the position of Ethereum became more shaky.
At the time of writing, Ethereum is trading at $1,612, down nearly 8%, according to Blockchain Homeland price data.
Despite the Marj event approaching, the ETH/USD and ETH/BTC currency pairs continued to decline, and the hype surrounding Marj failed to do much for Ether.
Altcoin Sherpa is the name of another popular crypto trader on Twitter who reacted to the price drop in the crypto market:
Even without the release of CPI data, this area ($22,700) was always a resistance zone for Bitcoin. Last year’s experience shows that one should always be careful about this level.
Bitcoin’s heavy roadblock resistance
The bulls have tried to kill sellers’ interest in the price range above $22,000. This issue shows the persistence of the bulls, which has led to the lack of price volatility in the past day.
The Material Indicators platform has shown a bull effort in the range of $22,000 to $22,500 in a screenshot shared from the Binance Bitcoin order book yesterday. The volume of orders in this period in Binance was about 13 million dollars.
In the meantime, the analysis platform Whalemap has also said that it is not surprising that the bulls are trying to maintain the current price range.
The analytics platform Whalemap wrote on Twitter:
A new resistance level to consider is $22,780-23,400. This is an important price level and the last important price level is in the price range of $19,000 to $25,000.
The chart above shows that wallets with very large balances at different price levels have accumulated Bitcoins, and this is shown by the green circles. Usually, the price levels associated with these circles become heavy supports and resistances for Bitcoin. Hence, the $22,780-23,400 range is the last resistance facing Bitcoin before $25,000.
Analyzing the current conditions, one of the famous crypto analysts, Crypto Ed, is still confident that the price correction will take place, but goes on to note that the interest of buyers is still maintained. He predicted a price drop to $20,800.
- Where are the resistances facing the price of Bitcoin?
The $22,000, $22,500, $23,400 and $25,000 levels are the resistances facing BTC.