Bitcoin (BTC) price experienced a 2.2% correction on Sept. 11 following the release of US consumer inflation data, but it managed to reclaim the $56,500 level within a few hours. The movement closely tracked the S&P 500 index, which saw a 1.6% decline on Sept. 11 as US Consumer Price Index growth hit its lowest level in over three years.
Bitcoin survived CPI volatility, but traders doubt further gains are possible
Bitcoin traders are skeptical that the $58,000 resistance will be breached, given the increased demand for bearish positions using BTC futures contracts.
Bitcoin/USD (blue) vs. S&P 500 futures (magenta). Source: TradingView
The price action over the past three days shows a high correlation between Bitcoin and the US stock market, at least in the short term. This scenario is common during significant events, such as expectations of macroeconomic data or upcoming US Federal Reserve (Fed) decisions.
Investors were hoping that inflation slightly below market consensus on Sept. 11 would push the central bank to adopt a more aggressive interest rate cut. The US Core Consumer Price Index (CPI) grew by 2.5% year-over-year in August, but when excluding food and gas, prices increased by 3.2%.
From a trading perspective, this data lowered the odds of a 0.50% interest rate cut on Sept. 18, causing a negative initial reaction in the stock market. Opinions may differ on how persistent inflation should impact Bitcoin’s price, especially when considering US debt financing costs.
The US Congressional Budget Office (CBO) projects that interest payments will surpass $1 trillion by 2025. Therefore, the longer the Fed keeps rates elevated, the more pressure it adds to government spending. In the long term, this inflationary trend could benefit Bitcoin’s price, despite the latest failure to break above $58,000 on Sept. 10.
However, pinpointing Bitcoin’s inability to maintain bullish momentum solely on macroeconomic data seems inconsistent, especially given that its last close above $60,000 was on Aug. 27. Some analysts point to outflows from spot Bitcoin exchange-traded funds (ETFs), while others cite ongoing regulatory…
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