Bitcoin Roller Coaster Ride Wednesday Underlines Its Vulnerability but Also Its Resilience

Bitcoin and ether rose on mildly favorable inflation data, sank amid rumors of a U.S. government sell-off of BTC and then climbed again as investors shrugged off the tumult.

AccessTimeIconMay 10, 2023 at 9:39 p.m. UTC
Updated May 11, 2023 at 4:27 p.m. UTC

If the approach of summer months has you contemplating roller coaster rides, look no further than today’s crypto markets. .

First, bitcoin and ether rode higher following a mildly encouraging U.S. inflation report. Then the price of the largest crypto by market capitalization tanked following internet rumors the U.S. government was selling $324 million in bitcoin. And then BTC rose again as investors regained their equilibrium.

The ups and downs reflected ongoing uncertainties about cryptos and wider macroeconomic conditions. Investors have remained cautious throughout the spring as they look for spurs to drive bitcoin’s price from its current $25,000-$30,000 range. When the catalysts will appear remains uncertain. In the interim, BTC seems susceptible to smaller, singular events and minor swings in market sentiment, although its rebound Wednesday also offered the latest evidence of its resilience.

Investors early Wednesday seemed buoyed by an unexpected decline in the U.S. Consumer Price Index (CPI) to 4.9% in April, sending bitcoin and ether’s prices up 2% and 1.4% in the hour after the Labor Department released the data. Those increases broke a four-day losing streak for the assets. Economists had predicted 5% CPI, matching the March index. The CPI almost a year ago soared past 9%.

But bitcoin plummeted in the ensuing hours, amid rumors that the U.S. government had sold more than 11,800 bitcoin. On-chain data showed movement of the BTC between two wallets at approximately 1:06 PM ET. The receiving wallet had a balance of approximately $633 million in BTC, but just three transactions on the Bitcoin blockchain.

Large BTC Movement 05/10/23 (Blockchain.com)

To be sure, on-chain data provider Glassnode showed no movement in the U.S. Government’s bitcoin balance. But perceptions often have a stronger impact than reality. In this instance, the possibility – even if unfounded – appears to have spooked investors.

U.S. Government Bitcoin Balance (Glassnode)

Bitcoin prices began to move higher by early afternoon, as the validity of the rumor came into greater question. BTC was recently trading near $27,900, about where it started the day after falling as low as $26,900.

Bitcoin is now 2.5% below its 20-day moving average of $28,520. Support for BTC at current levels appears to be strengthening, given historic levels of price activity near this level. .

Either is displaying similar behavior, with prices reverting to their 20-day moving average as well.

Upcoming, potentially impactful economic data includes U.S. jobless claims, and the producer price index (PPI), both set for release on Tuesday.

They will help the U.S. central bank next big decision in June whether to raise interest rates and have a major impact on crypto and other asset markets. Meanwhile, bitcoin like other roller coaster rides finished about where it began


Edited by James Rubin.

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Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX