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Bitcoin price fell by 3.8% after Wall Street opened on August 14, reacting to US July Consumer Price Index (CPI) data and its implications for 2024 interest rate cuts. TradingView data reveals that Bitcoin price dropped from a peak of $61,809 to a daily low of $58,883 within just three hours. This decline was accompanied by a 5% increase in daily trading volume, reaching $32.12 billion.
Bitcoin and Macroeconomic Data
Bitcoin lost $3,000 within hours as the July CPI report showed inflation rising at the expected rate. According to the official press release from the US Bureau of Labor Statistics, month-on-month inflation increased by 0.2% in July after falling by 0.1% in June. The annual rate rose to 2.9%, compared to the 3% forecast and June’s 3%:
“The all items index increased 2.9% over the 12 months ending in July, the smallest 12-month increase since March 2021. The index for all items less food and energy rose 3.2% over the last 12 months, the smallest 12-month increase in that index since April 2021.”
As a result, the CPI reading process, which had been bullish for risky assets including crypto, turned disastrous for Bitcoin and other cryptocurrencies. Market participants are now focusing on the Federal Open Market Committee (FOMC) meeting on September 18, where the Federal Reserve is expected to make its first rate cut since March 2020. According to CME’s FedWatch tool, investors are pricing in a 100% probability of a rate cut between 0.25% and 0.5% in September.
What’s Happening on the Bitcoin Front?
Market makers often exploit major macroeconomic events to liquidate Bitcoin investors. Bitcoin’s drop to $58,883 coincided with a sharp move in the Bitcoin futures market. Data from Coinglass shows that over $22.26 million in Bitcoin long positions were liquidated on August 14, with daily counts still ongoing at the time of publication.
Over the last four hours, more than $25.94 million in long Bitcoin positions were liquidated. Total liquidations in the crypto market reached $143.66 million, with $85.6 million of that being long liquidations.
Long liquidations typically occur when the price of the traded asset suddenly drops. This happens because investors who are bullish on the asset and open long positions face losses as the market moves against them. Bulls should consider a possible drop to $58,700, where there are buy orders exceeding $91.27 million.
