Crypto prices moved back and forth as inflation slowed at a lesser rate than expected.
Bitcoin sank in the first hour following the U.S. Bureau of Labor Statistics’ release of the January consumer price ondex (CPI), which showed prices rising 6.4% versus projections for 6.2%. Then bitcoin returned above $22,000, the level it had lost five days ago. BTC was recently trading at about $22,200, up more than 3% over the past 24 hours.
Crypto markets’ resilience underscores a new, albeit faint, optimism about inflation and the economy. The crypto Fear and Greed Index has been holding firmly in neutral territory for much of the past few weeks after weeks of lingering at extreme fear levels.
Despite the tepid decline, the CPI has now sunk seven consecutive months, implying the Federal Reserve’s efforts to stem inflation are yielding positive results. Things appear to be moving in the right direction.
Inflation has fallen from 9.1% to 6.4% since June 2022, even if it remains three times higher than the Federal Open Market Committee’s (FOMC) 2% target.
Consumers continue to feel the strain related to inflation. The CPI report showed that prices increased across the board, except for used cars.
On Tuesday, bitcoin and ether seesawed before holding fast at their current levels. Trading volume was light later in the day despite the increased volatility.
Bitcoin’s price moves stem from where BTC currently trades more than on any data release. Volume near bitcoin’s current range between $21,500 and $22,500 has been low, compared to high levels of volume at $20,000 and $23,000. Oftentimes prices will drift away from these lower volume ranges and land in areas where there has been greater historic activity
When an asset trades within these volume “valleys,” prices can often move rapidly in either direction. This appears to be the case when viewing BTC’s hourly chart throughout Tuesday.
The erratic moves on bitcoin’s hourly chart are difficult to see over BTC’s daily time frame.
Here we find a more orderly display of movement – a moderate increase on slightly above average volume. While the CPI data rocked the boat temporarily, as the day progressed calmer waters ensued.
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