When CPI inflation data came out on Tuesday and was higher than expected, Bitcoin and the rest of the cryptocurrency market fell sharply. At the moment, Bitcoin is trading at 8.4% over the past 24 hours, just above its important support level of $20,000.
Recent Released: Here’s The Exact Date That The Ethereum Merge is 99.76% Done
The price of Bitcoin fell at the same time that the S&P 500 fell 4.5% and fell below $4,000.
As on-chain data provider Santiment explains:
Tuesday, #Bitcoin fell along with the #SP500, which had its biggest drop in a single day in two years after a disappointing #CPI report. The relationship between the sectors stays strong, and crypto usually does best when it doesn’t depend on equity.
As we all know, Bitcoin has been more similar to the S&P 500 lately. As long as Bitcoin keeps moving in the same way as the stock market, it’s likely to stay in the bear’s grip for the foreseeable future.
Bitcoin CPI Inflation Can Drop 20% More
If BTC keeps moving in the same way as the S&P 500, another 20% drop to $16,000 is likely.
Jurrien Timmer, who works at Fidelity as director of global macro, said:
If a 14x forward multiple is the right way to value stocks, then the fair value of the S&P 500 at an EPS of $230 is between 3200 and 3400. This shows that the bear market is still going on.
In the same way that U.S. On Tuesday, when CPI inflation hit, the Bitcoin Fear & Greed Index dropped from 34/100 to 27/100. But it hasn’t reached the “extreme fear” zone yet, which shows that investors are still holding on.
Once again, news of inflation keeps Bitcoin from crossing its 200-day moving average (DMA), a key point of resistance for Bitcoin this year.
Along with Bitcoin, a number of altcoins have also come back to their original value. A day before the Merge event, the price of Ethereum (ETH) has dropped again by 7%, dropping to $1,600. As the Merge gets closer, there has been some pressure to sell ETH because of the “sell the news” trend.
Image Source: TradingView
Source: Google Trend