- July’s U.S. CPI was softer than expected, at 2.9% against an estimated 3.0%.
- The U.S. government’s $593M BTC move could have spooked the markets.
Bitcoin [BTC] failed to stay above $60K despite a softer July U.S. CPI (Consumer Price Index) data, which came in at 2.9% YoY (year-over-year) against the expected 3.0%.
The softer inflation data tipped a slight relief bounce across the U.S. equities market, including the tech-heavy Nasdaq Composite (IXIC).
However, BTC, which has a strong positive correlation to the Nasdaq Composite, went in the opposite direction.
It shed 3%, dropping from $61.8K to $58.8K on the 14th of August. At the time of writing, it was weakly holding above the $58k level.
Source: BTC/USD, TradingView
The softer CPI data is still bullish for BTC
Despite BTC’s sluggish intraday session on the 14th of August, market insiders were still upbeat that the CPI print was bullish for BTC.
Eliezer Ndinga, VP, Head of Strategy and BD at digital asset manager 21Shares, told AMBCrypto that the softer CPI would increase the odds of a Fed rate cut in September and boost the crypto markets.
“With inflation coming in as expected, the likelihood of a smaller 25bps rate cut by the Fed has increased, which may support risk-on assets.”
Bitwise’s CIO Matt Hougan echoed the same outlook,
“The Fed will start cutting rates in September; 3% is the new baseline for inflation, not 2%. Both are bullish for Bitcoin.”
At the time of writing, interest rate traders were pricing a 62% odds of 25 basis point (bps) Fed rate cut by September.
Source: CME
$593M BTC move by U.S. spooks market again?
Meanwhile, the U.S. government moved 10K BTC, worth over $590M, to another Coinbase Prime on Thursday, per Arkham data.
Despite reportedly being for custody purposes, a similar transfer by the U.S. government spooked the markets about two weeks ago and dragged BTC lower.
As a result, FundStrat Insights claimed that the U.S. government action could have dented the expected bounce from the softer CPI data.
In the meantime, the Coinbase Premium Index was still positive at the time of writing amidst the declining recovery momentum. It suggested that the largest digital asset still had slight demand from U.S. investors.
Source: CryptoQuant
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