As June's consumer price index came at 9.1%, which was higher than expected. Some analysts believed that the recent inflation reading would be the peak of the price increases. Thus, the CPI for June month seemed to account for the increase with 40-year record highs, again. As a knock-off result, Bitcoin sees a breakdown in its prices.
Due to the increase in the CPI digits from 8.8% to 9.1%, Bitcoin sees a 4.2% price down to $19,200 within minutes of the report release.
Rumors support that Federal Reserve might bring out tightening monetary policies to control inflation resulting in bearish sentiment over the market, including Bitcoin.
While Ether (ETH) is down 4.5% from the $1080 highs to $1036 at the time of writing.
While the market has seen a lot of whipsaws recently, long-term bitcoin investors are not selling their proportions at $20,000. This makes the current market selling majorly dominated by speculative sellers.
Holdings by long-term investors are a sign of confidence that the cryptocurrency markets will survive against this Fed-induced bear market.
It has been on record that 77% of the total supply of 21 million Bitcoin is under the ownership of the investor category, which is lower than 80% in January highs, but well above the peak of 60% in 2017.
Generally, the speculating breed consists of tree tail traders and short-term investors who appear to profit from the employment of strategies in a short period to churn profits. As a result, they are more sensitive to macroeconomic changes like Fed policy raises.
The bank run in recent months has led to the liquidity crisis in big crypto companies. With faulty risk management practices and the need to stay solvent, crypto miners and traders have to offload their coins.
Also, a resultant effect was seen on the US dollar index. After the CPI report, the index peaked at 20-year highs, forcing the euro below dollar parity for the first time.
Since the FED's primary concern is to tamp down inflation, the rumor that it might increase the rates by 0.75 bps again this month could turn out to be a red-hot announcement.
Bitcoin is currently below the trendline June 17th and July 1st price actions.
While the current price action is currently broken below the trend line, it could fall further to $18,850.
According to coinglass data, the total liquidations in the Bitcoin market have been $85 million within 24 hours.