Following the release of macroeconomic data in the United States, concerns about inflation have increased again. With these growing concerns, the crypto market, led by Bitcoin, and other risky investment products saw high levels until the Wall Street opening on January 11. So, what is expected for Bitcoin and the cryptocurrency market during this period? Let’s examine.
Why Did Bitcoin Fall?
According to data from TradingView, Bitcoin, which reached $49,000 during the day, was trading at $46,074 at the time of writing. The pressure from December’s Consumer Price Index (CPI) led to the abandonment of expectations for a slowdown in inflation, revealing instead that prices were rising faster than anticipated.
According to data from the US Bureau of Labor Statistics, the CPI increased by 0.3% on a monthly basis, against the expectation of 0.2%, and by 3.4% on an annual basis, against the expectation of 3.2%:
“The all items index increased by 3.4 percent for the 12 months ending December, a larger rise than the 3.1 percent increase for the 12 months ending November.”
This month’s CPI announcement, which is usually prone to causing volatility in risk assets, further increased the existing tension in the crypto markets. On January 10, the first US spot Bitcoin exchange-traded fund (ETF) was approved, and January 11 was set as the first trading day for ETFs. Popular investor Jelle shared the following comments on the matter:
“I’ve said this many times over the past months: this is not a chart you want to short. It will eventually go higher.”
Ethereum Stands Out
Glassnode’s lead analyst Checkmate, with a longer-term perspective, dismissed the idea that the launch of ETF products would be a ‘sell the news‘ event.
Amidst all these developments, Ethereum, which fully outpaced Bitcoin, saw a 24-hour gain exceeding 10% due to what appeared to be an investor rotation following the ETF decision, but this situation did not last. Investor Crypto Tony commented on the matter:
“Many are not seeing the rise they expected in Bitcoin, so now they are flocking to Ethereum.”
The ETH/USD pair reached $2,666 during the day and managed to see the highest levels since the beginning of May 2022.
