Crypto and equities markets took a bit of a tumble on Aug. 9 as traders grew a bit skittish ahead of tomorrow’s Consumer Price Index (CPI) report. The details of the print will shine a light on whether the Federal Reserve’s aggressive interest hikes are effective in tamping runaway inflation and it could have an impact on the size of future hikes.
Earlier in the week, Tesla CEO Elon Musk suggested that July data will reflect the United States reaching peak inflation and that any recession will be “mild to moderate.” Right now, the consensus is that July data will be lower than the record-breaking 9.1% figure seen in June. The price of energy commodities (oil, natural gas) noticeably decreased in July and the Fed is hopeful that the previous back-to-back 0.75 basis-point hikes will combat soaring prices in other parts of the economy.
As is custom, Bitcoin (BTC), Ethereum (ETH) and most altcoins pulled back as traders de-risk ahead of the CPI print. BTC price dropped as low as $22,800, while Ether corrected to $1,670. The rationale that traders are sheltering in stablecoins is sensible, but from a technical analysis point of view, the Aug. 9 pullback is simply a lower support test after the most recent support-resistance flip of the past week, and large-cap assets like ETH and BTC continue to trade within their multi-week ranges.
Traders take shelter until CPI publishes
According to independent market analyst Michaël van de Poppe, the fear surrounding the Aug. 10 CPI is “unwarranted” and once the series of retests is complete, BTC price should rally toward $28,000.
#Bitcoin correcting due to several reasons.
▫️ (Unwarranted) fears among CPI data tomorrow.
▫️ Resistance around $24.3K continuing being resistance.
Expecting to see a test around $23-23.2K to hold, so trend continues.
Another test of resistance -> break-out towards $28K. pic.twitter.com/hqcJ6Ry64c
— Michaël van de Poppe (@CryptoMichNL) August 9, 2022
Adding to the narrative that the current pullback is “expected”, trader @52kskew suggested that BTC’s price action is being impacted by a “healthy unwinding in perps” as…