The Bitcoin price briefly crashed below $60,000 for the first time since September. This price decline followed the release of the Consumer Price Index (CPI) inflation data, which came in higher than expected. This macro data and factors like the US presidential elections are causing market uncertainty, leading to a bearish outlook for the flagship crypto.
Why The Bitcoin Price Crashed Below $60,000
The Bitcoin price crashed below $60,000 following the release of the US CPI inflation data. The CPI showed that inflation in the US hit 2.4% in September, higher than expectations. This provided a bearish outlook for BTC, suggesting that the Fed’s 50 basis points (bps) rate cut might not happen at the November FOMC meeting as expected.
Traders were already pricing into the 50 bps rate cut happening following Fed Chair Jerome Powell’s dovish speech after the rate cut at the September FOMC meeting. However, recent developments like the CPI inflation data show this might not happen. A rate cut is typically bullish for Bitcoin since more liquidity will likely flow into the crypto’s ecosystem following such monetary easing policies.
It is worth mentioning that the CPI data isn’t the only macro development that has brought about the bearish sentiment among investors. The US Jobs report, released last week, also raised questions about the US economy.
The nonfarm payroll data figures came in way higher than expectations, leading market participants to question the authenticity of the data and whether the labor market was as strong as Powell earlier 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 on their next course of action based on incoming data, like the CPI data released yesterday.
Therefore, the Bitcoin price is reacting to the uncertainty in the market as investors remain cautious about allocating so much capital to the flagship crypto. These investors are offloading their BTC holdings, fearing prices will drop lower in the short term. Crypto analyst Ali Martinez revealed that Bitcoin whales have sold or redistributed around 30,000 BTC ($1.83 billion) in the past 72 hours.
US Presidential Elections And Middle East Tensions
The US presidential elections and rising tensions in the Middle East have also contributed to market uncertainty and the bearish outlook for the Bitcoin price. It is typical for the market to experience a lot of volatility as the election draws closer. However, it is worth mentioning that Donald Trump, who is pro-crypto, is leading in the polls, providing a bullish outlook for Bitcoin.
Meanwhile, there is the possibility of Israel attacking Iran at some point, which is also making Bitcoin investors apprehensive. In the meantime, Israel continues to attack Hezbollah forces, which is also sure to aggravate tensions in the Middle East, especially considering that Iran backs the militia group.
The Bitcoin price has impressively recovered above the $60,000 support level. At the time of writing, BTC is trading at around $60,700, down in the last 24 hours, according to data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
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