Bitcoin’s Weakness is Observed in Advance of CPI Report; Cardano and Solana Lead Fall for Majors
Bitcoin (BTC), hovered at just below $30,000 in the European hours, showing signs of weakness before the release of Friday’s key CPI report.
The asset has traded in a relatively tight range — from the $28,000 to $31,000 level — over the past month amid a poor macroeconomic market sentiment and systemic risks from the crypto space.
If current levels are not sustained, price-charts show bitcoin could fall to $29,400. Over the past week, bitcoin has bounced around from these levels several times. This suggests that buyers are interested in buying at those prices.
Friday saw weakness in several major cryptos with Cardano’s ADA tokens falling some 7% in the past 24 hours to lead losses among majors. Solana’s SOL fell 6% , ether (ETH) lost 2.3%, while XRP fell a nominal 0.8%.
The overall crypto market capitalization fell by 2.3% to $1.28 Trillion, continuing the slide from a capitalization of more than $2.2 trillion in March 2022.
The crypto price drop occurred before the U.S. Consumer Price Index report (CPI) was released at 08:30 ET Friday. Economists expect inflation in May to rise over 0.7%, meaning an overall 8.3% rise since last year, as per CNBC.
Inflation concerns have contributed to bitcoin’s fall in the past several weeks. The U.S. Federal Reserve raised interest rates by $2 trillion, its largest increase since 2000, in May. This is in an effort to tighten monetary policies after the stimulus of $2 trillion over the past few years. This resulted in a fall in global stocks that was reflected in losses in bitcoin and other cryptocurrency.
Earlier in April, Goldman Sachs (GS) analysts said in a note that the Fed’s aggressive measures to control inflation could result in a recession, which added to investor concerns.
Although bitcoin has closely tracked the price movements in risky tech stocks over the past few months but some market observers remain positive about the long-term growth potential of cryptocurrencies,
“Generally, the correlation gap between cryptocurrencies and stock markets is long-term good news as it attracts the attention of professional investors,” said Alex Kuptsikevich, FxPro senior market analyst in an email.
“Weakness in equity and bond markets, sagging gold, and the murky outlook for the real estate market are turning to cryptocurrencies as another tool in a diversified portfolio,” Kuptsikevich added.