As U.S. inflation data continues to surpass expectations, Bitcoin maintained its position near the crucial $26,800 level as Wall Street opened on October 12. BTC's price volatility has remained relatively stable after hitting a two-week low on October 11.
The consumer price index (CPI) for September, reported on October 12, reinforced the trend of sustained inflation, with a year-on-year increase of 3.7%, slightly exceeding the 3.6% expectations. When excluding food and energy, the figure stood at 4.1%, in line with forecasts.
An official release from the U.S. Bureau of Labor Statistics confirmed that "the all items index increased 3.7 percent for the 12 months ended September, the same rate as for the 12 months ended August." Furthermore, "the index for all items excluding food and energy rose 4.1% over the past 12 months. The energy index fell 0.5% in the 12 months to September, and the food index rose 3.7% over last year."
However, the monetary policy and the Federal Reserve are currently facing a dilemma, as pointed out in the Financial Review Source's Corbisi letter. A "longer-term rise" in U.S. interest rates is anticipated to exert pressure on risk assets, including cryptocurrencies.
Nonetheless, the probability of the Fed raising rates at the upcoming Federal Open Market Committee (FOMC) meeting on November 1 remains low at 7.4%, according to CME Group's FedWatch tool. In terms of Bitcoin, cautious market participants see no immediate reason for the cryptocurrency to resume its uptrend. A popular trader, Skew, continues to mark $26,800 as a critical level for bulls to hold as support.
Analyzing on-chain liquidity indicators reveals that there's significant demand above the $24,750 level, a critical point over the last two quarters. Co-founder Keith Alan commented on the macroeconomic front ahead of the CPI report, stating, "It's been a while since we discussed whether BTC prices are good=good or good=bad."
Regarding the near future, trading firm QCP Capital underscores the ongoing downward trajectory for both Bitcoin and the largest altcoin, ETH, despite various underlying bullish factors in the fourth quarter. If the CPI data exceeds expectations, the relative underperformance of Bitcoin and ETH might reduce their beta to the downside. Otherwise, traders will be closely watching the $25-26k level on the downside and the $29-30k level on the upside, which will be pivotal in determining the next trend.
