Bitcoin saw a dip below the $63,500 mark on Wednesday, despite the US Consumer Price Index (CPI) inflation data aligning with expectations. The July CPI registered an increase of 0.1% month-on-month and 3.4% year-on-year, with core CPI, which excludes food and energy, rising by 0.2% monthly and 2.5% annually. Ultimately, these figures did little to motivate traders, leading to a slight decline in BTC’s value.
Following the CPI report, Bitcoin was last seen trading down 0.2% at $63,487. While US equities remained relatively stable in response to the data, Bitcoin’s inability to hold onto its gains marked a clear deviation from the broader market trends.
Fabian Dori, Chief Investment Officer at Sygnum Bank, highlighted that the CPI data, coupled with a weak jobs report from the previous Friday—which showed a loss of 23,000 jobs—points to a “gradual cooling without a recession scare.” He further noted that the odds of the Federal Reserve holding interest rates steady in September have increased to between 60% and 62%, a significant rise from just 30% a month prior.
$63,000 Support Under Pressure
In a troubling observation, trader and analyst Rekt Capital flagged a concerning trend in Bitcoin’s price movements. He pointed out that each subsequent bounce off the $63,000 level has grown weaker: starting from a 6.27% bounce, then 5.83%, followed by 3.18%, and now just 1.15%. This pattern raises alarms about the potential for a significant breakdown if the trend continues.
“At some point, the bounces will become so weak that the floor will simply break,” Rekt Capital warned on social media.
The trading environment continues to show signs of volatility as Bitfinex Alpha noted that while equities have reached all-time highs recently, Bitcoin has struggled to maintain a foothold above the $65,000-$65,500 range. Since July 26, it has failed to close above this threshold, despite recording six consecutive daily highs in that vicinity between August 5-10.
Options Market Reflects Caution
Adding to the cautious sentiment, Andrei Grachev of DWF Labs pointed out that Bitcoin’s options market is currently pricing in greater downside risk compared to upside potential. Strikes near $60,000 for the end of August expiry are being valued higher than equivalent strikes near $70,000, suggesting that traders are bracing for a downturn.
Analyst Ted Pillows echoed this sentiment, noting a weakening momentum for Bitcoin. He indicated that despite gains in stocks and metals, Bitcoin’s struggle to stay above the $65,000 mark could lead to a potential drop toward the $60,500-$61,000 range before any upward reversal occurs.
“Bitcoin momentum is weakening, and there’s a chance it could drop towards $60,500-$61,000 before any reversal,” Pillows stated.
Further complicating matters, on-chain data firm Glassnode revealed that Bitcoin’s spot exchange volume has plummeted to the lowest levels seen since 2019. This decline has raised concerns, particularly as Glassnode identified $58,500 as a key downside risk level should thin bids and leveraged positions cause a significant breakdown below recent lows.
“Bitcoin Spot Volume Hits Lowest Since 2019 as Glassnode Flags $58,500 Downside Risk,” Wu Blockchain reported.
The next significant data point to watch will be Thursday’s July Producer Price Index (PPI) report, which could provide further insights into market dynamics.
