The Bitcoin price It briefly crashed below $60,000 for the first time since September. This price drop followed the release of the Consumer Price Index (CPI) inflation datawhich came out higher than expected. This macro data and factors such as the US presidential election are causing market uncertainty, leading to a bearish outlook for the flagship crypto.
Why Bitcoin Price Dropped Below $60,000
The Bitcoin price crashed below $60,000 after the Bitcoin price release US CPI inflation data. The CPI showed that US inflation was 2.4% in September, higher than expected. This created a bearish outlook for BTC, indicating that the Fed’s 50 basis points (bps) rate cut at the November FOMC meeting might not materialize as expected.
Traders had already taken into account the subsequent 50 basis point interest rate cut Fed Chairman Jerome Powell dovish speech after the rate cut at the September FOMC meeting. However, recent developments, such as the CPI inflation data, show that this may not happen. A rate cut is generally bullish for Bitcoin as more liquidity is likely to flow into the crypto ecosystem as a result of such monetary easing policy.
It’s worth noting that the CPI data isn’t the only macro development triggering bearish sentiment among investors. The US jobs report, published last week, also raised questions about the US economy.
The figures on non-agricultural wage data came in much higher than expected, leaving market participants questioning the authenticity of the data and whether the labor market was as strong as Powell previously suggested.
Meanwhile, the Fed’s September minutes showed that a rate cut in November was far from certain. The committee stated at the meeting that they will decide their next course of action based on incoming data such as the CPI data released yesterday.
That’s why the Bitcoin price responds to the uncertainty in the market as investors remain cautious about allocating so much capital to the flagship crypto. These investors are abandoning their BTC positions, fearing that prices will fall lower in the short term. Crypto analyst Ali Martinez revealed that Bitcoin whales have sold or redistributed approximately 30,000 BTC ($1.83 billion) in the last 72 hours.
US presidential elections and tensions in the Middle East
The US presidential election And rising tensions in the Middle East have also contributed to the market uncertainty and bearish outlook for the Bitcoin price. It is typical for the market to experience a lot of volatility as the elections approach. However, it is worth mentioning that pro-crypto Donald Trump is leading in the polls, providing a bullish outlook for Bitcoin.
Meanwhile, there is a possibility that Israel will attack Iran at some point, which is increasingly the case Bitcoin Investors concerned. Meanwhile, Israel continues to attack Hezbollah forces, as it undoubtedly will exacerbate tensions in the Middle East, especially given that Iran supports the militia group.
Bitcoin price has impressively recovered above the USD 60,000 support level. At the time of writing, BTC is trading around $60,700, down in the past 24 hours, according to facts from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com