Bitcoin rebounds from its $36.2K lows as CPI inflation slows more than anticipated.
Stocks receive a positive surprise from CPI, and Bitcoin sees increased demand as inflationary pressures demonstrate a faster decline than previously believed.
The price of Bitcoin (BTC) experienced a decline to $36,156 but aimed for a recovery to $37,000 during the opening of Wall Street on November 14. This movement was triggered by the latest United States inflation data, which defied expectations.
According to data from various sources, including TradingView, the strength of BTC prices rebounded as the Consumer Price Index (CPI) indicated a slowdown in inflation for October. The CPI figures were 0.1% lower than both year-on-year and month-on-month market forecasts. The annual change in CPI was 3.2%, compared to the 4.0% for core CPI.
The U.S. Bureau of Labor Statistics officially confirmed the smaller increase, stating, "The all items index rose 3.2 percent for the 12 months ending October, a smaller increase than the 3.7-percent increase for the 12 months ending September."
Despite the 31st consecutive month with inflation above 3%, the markets reacted positively, with the S&P 500 rising 1.5% on the day. The Kobeissi Letter, known for its skepticism of Federal Reserve policy in the current inflationary environment, acknowledged the positive outcome.
Although Bitcoin's response was relatively modest, experiencing a brief dip before rising towards $37,000, market analysis from Material Indicators revealed thin liquidity overall. This lack of liquidity, combined with a subdued presence of whales on exchanges, led to increased BTC exposure among retail investors.
Material Indicators noted, "Upside liquidity around the active trading zone is so thin, whales can’t make large orders without major slippage."
As BTC traded around 4% lower than the 18-month highs observed earlier in the month, analysts emphasized that such retracements were normal within the broader uptrend. James Van Straten from CryptoSlate mentioned that corrections of up to 20% could be expected in bull markets, contributing to the overall health of the market.
Van Straten pointed out that market corrections are a standard part of financial cycles and are crucial for maintaining the market's overall health. Despite the potential for deeper corrections, he noted that BTC/USD was still up 120% year-to-date.