Key Insights
- Despite claiming highs of $21,700 over the last week, it has crashed massively to $16,740.
- Since August, Bitcoin has maintained its trading range and has avoided any obvious breaks from its range between $19,000 and $22,800 until the recent crypto crash.
- Today, the Consumer price index (CPI) data will be released detailing October’s inflation rate in the United States.
The fear, Uncertainty, and Doubt (FUD) on Bitcoin have started to gain traction, especially after the cryptocurrency’s price rejection from the $21,700 zone during the weekend.
Despite claiming highs of $21,700 over the last week, it has crashed to $16,740.
The flagship cryptocurrency was bullish over the last week, claiming an impressive multi-week high of around $21,700. However, the price action of BTC has been bearish and is starting to show signs of choppiness as the bulls and bears decide on where the price heads next.
Today, the Consumer price index (CPI) data will be released detailing October’s inflation rate in the United States. For context, the Consumer Price Index (CPI) is a gauge of how prices for a market basket of consumer goods and services have changed on average over time for urban consumers.
In essence, it is used to gauge the average change in prices over time and is used by the US to adjust the cost of living and income of its citizens.
This data is expected to affect the prices of many commodities, traditional or otherwise, with cryptocurrencies included.
The cryptocurrency market is currently on edge following the recent crash of FTX.
In summary, this turmoil involves Binance CEO Changpeng Zhao disclosing his plan not to purchase FTX coin holdings.
The question remains: How will all of these different factors affect Bitcoin? Well, here are a few things to know.
1. Bitcoin’s Sentiment Gauge Has Spiked
It might be better to start with the good parts.
The crypto market may not be headed for destruction, as far as the crypto fear and greed index goes.
The Crypto Fear and Greed Index is a statistic that assesses the general sentiment of traders and investors across the crypto market based on BTCÂ and other significant cryptocurrencies.
It uses social signals and market patterns to come to its conclusions and is called an index because it uses various data sources to create a single figure.
Low figures on the fear and greed index indicate fear and that investors are starting to sell off their holdings. This is a bullish signal and may indicate that it is (almost) time to buy.
At the same time, high figures indicate greed, and more investors are jumping into the market. This is a bearish signal and may indicate that a market reversal may be on its way.
Over the weekend, the cryptocurrency market rose to its highest level since mid-August.
Due to the market’s bearishness, the metric crashed to 30/100.
Today, the measure dropped to the 22/100 zone and is squarely in the “fear” category.
2. BTC/USD Price Took a Major Hit
Bitcoin’s weekly candle closed at $16,751 on 9 November. The FTX news regarding Binance destroyed the chances of Bitcoin closing above the $21,000 mark.
In addition to selling off Binance’s FTX holdings, the exchange’s CEO mentioned that selling off these holdings would take “a few months.”
So far, Michael van de Poppe, the founder and CEO of the trading firm Eight has mentioned that he would be searching for “buy the dip possibilities” in the cryptocurrency market.
3. Bitcoin Miners Slip up on Difficulty Adjustments
According to data from BTC.com, the mining difficulty on the Bitcoin network has decreased by 0.2% since 7 November.
This decrease has caused a squeeze in profits for the miners, even as the network’s hashrate rises.
4. Bitcoin Funding Rates Are Surging
Perpetual contracts use funding rates to keep the Bitcoin price in these futures trades near its current market price.
When funding rates are high, it may imply that the market may experience a rise in Bitcoin’s price and that traders are paying extra to go long on BTC.
The result of this happening can be negative because if the cryptocurrency price suddenly goes down, Â bullish positions get liquidated.
As Bitcoin reached $21,000 last month, there was a record number of liquidations, according to data from CoinGlass.
5. Upcoming CPI DataÂ
After the Federal Reserve voted to increase interest rates by another 0.75%, news concerning the Fed dominated the last week of October.
In November, however, markets keep an eye on the Consumer Price Index (CPI) data for October as this is implemented.
According to estimates from economists at Bloomberg, the year-on-year inflation is expected to hit 7.9%. A figure that will be down 0.3% from September.
Cryptocurrencies and other kinds of risk assets may benefit from any CPI reading that is lower than predicted since it theoretically raises the likelihood that the FED would delay future rate hikes.
However, the matter of the U.S. midterm elections to address before CPI and jobless claims might be a source of volatility in and of itself.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
