Bitcoin BTC Price Drops Below $27K, Reversing Post-CPI Rally
Bitcoin (BTC) fell below $27,000 on Wednesday midday, reversing a morning jump following the release of mildly encouraging US inflation data.
The BTC/USD trading pair on Coinbase traded as low as $26,800 before regaining some ground, according to TradingView data. The largest cryptocurrency by market capitalization recently traded at around $27,400, down more than 4% in the last hour and 1.8% in the last 24 hours.
Coinglass data showed that traders betting on a price move liquidated over $47 million in BTC long positions in roughly the last hour versus just over $5 million in BTC short position liquidations. These types of long squeezes tend to push prices lower.
Riyad Carey, research analyst at crypto data firm Kaiko, pointed out that there are still concerns about low liquidity in the markets, with BTC̵[ads1]7;s overall market depth of 2% – a metric used to assess liquidity conditions – not having recovered since the collapse of crypto exchange FTX last November. .
It’s “a symptom of illiquidity,” he told CoinDesk.
BTC’s price initially jumped after Wednesday morning’s Consumer Price Index (CPI) report, released by the Bureau of Labor Statistics, showed that annual inflation slowed to 4.9% in April from 5% in March and less than the 5% forecast. CPI rose 0.4% on a monthly basis, in line with expectations and higher than 0.1% in March.
Ether (ETH), the second-largest cryptocurrency by market cap, followed a similar pattern, falling 1% in the past 24 hours to change hands at around $1,860. The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, fell 1% in the last 24 hours.
Stocks were mixed Wednesday midday (ET), with the S&P 500 trading down 0.1%, while the tech-heavy Nasdaq edged 0.5% higher. The Dow Jones Industrial Average (DJIA) fell 0.6% for the day.
“The selloff coincided with a fall in stocks, so it may be partially correlation-led,” Lucas Outumuro, head of research at blockchain research firm IntoTheBlock, told CoinDesk.
UPDATE (10 May 2023, 18:37 UTC): Adding Carey comments.