Bitcoin lost nearly 3% of its value just moments after the US government released inflation data. The asset’s price slipped from a daily high of $65,234 to a low of $63,304 in a short period, erasing the hopes of buyers preparing to break through new resistance.
Ironically, July’s Consumer Price Index (CPI) report contained no bad news. Headline inflation rose 0.1% on a monthly (MoM) basis and slowed to 3.4% from its previous rate of 3.5% in June. Core inflation also aligned with consensus economist expectations, rising 0.2% month-on-month and 2.5% year-on-year.
The lack of surprises from the data release triggered profit-taking. CoinEx Chief Analyst Jeff Ko assessed that the market’s flat reaction proved the CPI figures were already priced in before the official report was published. The “sell the news” pattern was in full effect; when the actual news aligned with predictions, market participants chose to liquidate their positions.
Technical Indicators Pointing Downward
Current technical conditions explain why selling momentum quickly dominated. Over the past few weeks, Bitcoin’s price action has been bound within a tight range of $62,000 to $66,000. This consolidation phase was accompanied by shrinking trading volume and implied volatility.
In terms of trend indicators, downward pressure clearly holds control. The Aroon Down reading surged to 71.43%, leaving the Aroon Up lagging far behind at 14.29%. At the same time, the Relative Strength Index (RSI) indicator on the four-hour chart sits at 43.85. This level indicates weakening buyer momentum, although the price has not yet dropped into the oversold area. For now, Bitcoin hangs precariously above the 50-day moving average at $63,445, which acts as the last line of short-term defense.
Focus Shifts to Interest Rates and Fund Flows
This price weakness aligns with the drying up of institutional capital inflows. According to on-chain tracking data from lookonchain, spot Bitcoin ETF products suffered net outflows of $72.24 million within a single day. In comparison, its rival asset, the Ethereum ETF, received fresh inflows of $7.47 million during the same period.
According to Ko, the crypto market’s resurgence cannot rely on a single inflation sentiment. A resilient recovery requires three green lights to turn on simultaneously: declining real yields, a weakening US dollar, and resurgent institutional inflows into ETF and stablecoin products.
Large investors are now shifting focus to digest other factors. Compared to inflation, July’s employment report proved more influential in guiding future interest rate policy projections. The nonfarm payrolls report, which contracted sharply by 23,000 jobs - in stark contrast to expectations of an 80,000 job addition - forced the market to lower the probability of a September rate hike from 57% to 44%.
For traders holding positions right now, the stalemate around the $63,000 price range demands extra patience, at least until a convincing combination of macroeconomic sentiment arrives to break the selling pressure.
Reported from crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
