Bitcoin experienced a slight rebound to approximately $109,300 after dipping below $109,000 late last night. Despite this resurgence, the cryptocurrency is down 1.5% within the last 24 hours as market reactions adjust to the latest inflation data released by the Bureau of Labor Statistics. The report indicated a year-over-year increase of 2.9% in core inflation, slightly above July’s figure of 2.6%.
Over the past day, the cryptocurrency market saw over $970 million worth of futures contracts liquidated, with a significant $852 million of that linked to long positions anticipating further price increases. This liquidations spike occurred as the market faced broader declines among major assets, including Bitcoin, which has seen a 5.9% drop over the past week.
Investor sentiment seems increasingly bearish, with 69% of users on Myriad, a prediction market platform, forecasting that Bitcoin will decrease to $105,000 before breaking through to $125,000. This shift comes amidst uncertainties surrounding new tariffs announced by former President Donald Trump, which are set to take effect on October 1. These tariffs include a 100% duty on branded drugs and a 25% tariff on heavy-duty trucks, with additional taxes on furniture and kitchen/bathroom fixtures.
Fabian Dori, Chief Investment Officer at Sygnum Bank, noted that the inflation data suggests some easing in price pressures, yet leaves policymakers with a challenge of balancing lingering inflation with signs of a softer labor market. He stated that if inflation continues to trend downwards, risk assets could receive a boost from improving confidence in the Fed’s easing cycle. However, any upside surprises in inflation data could shift expectations regarding rate cuts, potentially weighing on equities and bolstering the dollar.
The futures market disruption has shaken Bitcoin’s standing further, with over $1 billion worth of crypto contracts liquidated during a 24-hour span recently. Data from CoinGlass reveals that the largest single liquidation was a $19.2 million ETH-USDT contract on the HTX exchange, highlighting the volatility in the market.
In light of the ongoing economic uncertainties, particularly the new tariffs that could introduce additional inflationary pressures, Dean Chen from crypto derivatives exchange Bitunix advised traders to exercise caution. He emphasized the importance of managing leverage carefully and gradually scaling into positions, recommending $108,000 as a key support level and $111,000 as a near-term resistance zone.
Market participants are closely monitoring public statements from Federal Reserve Chair Jerome Powell for insights into the Committee’s monetary policy direction ahead of its next meeting. The CME FedWatch Tool currently indicates a 87.7% probability of a 25-basis point rate cut next month, though this figure represents a slight decrease from the previous week’s 91.9%. This optimism contrasts with the 68% of Myriad users predicting a similar rate cut.
In a recent speech, Powell expressed a more tempered stance regarding the economic impact of tariffs compared to earlier in the year, suggesting that the effects are likely to be short-lived and would result in a one-time shift in price levels. As traders brace for potential shifts in monetary policy, the broader implications for Bitcoin and other risk assets remain under scrutiny.
