Inflation Jitters Shake BTC

Bitcoin (BTC) experienced substantial price fluctuations on the 13th of September, influenced by unexpected developments in the United States' macroeconomic landscape.

BTC/USD hourly chart as sourced from TradingView  

An increase in fuel and housing costs pushes August's CPI above the projected target

The BTC ticker displayed a noticeable downturn, settling at $26,340. This decline was meticulously observed on TradingView, with BTC appearing to teeter precariously close to breaching the $26,000 threshold.

The month of August witnessed the release of inflation data via the Consumer Price Index (CPI), which surpassed expectations by a modest 0.1%, registering at 3.7% year-on-year. The surge in gasoline prices played a pivotal role in this upswing, contributing to more than half of the overall increase, as highlighted in the official press release by the U.S. Bureau of Labor Statistics. Additionally, the shelter index continued its upward trajectory for the 40th consecutive month, further bolstering the August CPI figures.

Chart depicting the 12-month percentage change in the U.S. CPI, sourced from the U.S. Bureau of Labor Statistics  

Prior to the release of this data, participants in the cryptocurrency market had issued warnings about the potential impact of a higher-than-anticipated CPI reading. Such an outcome could exert pressure on the market, signaling prolonged concerns about inflation. This, in turn, might hold implications for the future direction of economic policy and its degree of stringency.

One notable trader, CrypNuevo, expressed concerns on X (formerly Twitter), stating, "I anticipate that the next CPI will surpass 4%, given the rapid increase in gasoline prices. Inflation remains a significant issue, particularly in the latter half of this year."

It's noteworthy that the CPI was already projected to exceed the previous July year-on-year figure, with the August reading poised at 3.6%.

Liquidity for Bitcoin bids remains concentrated at $25,000 and lower levels

Before the release of the CPI data, Keith Alan, co-founder of the on-chain monitoring platform Material Indicators, maintained an optimistic outlook on BTC's price momentum for the week. He acknowledged that while BTC's momentum had slightly ebbed, it remained robust enough to retain a significant portion of the gains achieved after the recent bounce. However, Alan cautioned that several technical resistances, including various daily moving averages, loomed above the current spot price.

As the trading day continued, with Wall Street's opening still on the horizon, market volatility persisted, leaving BTC/USD without a discernible trend at the time of writing. An examination of the BTC/USDT order book on Binance, one of the world's largest exchanges, revealed limited liquidity around the spot price, with a more substantial concentration of buy orders clustered at the $25,000 mark.