• Bitcoin price received a massive blow from its other party in the pair, with the dollar roaring back.
  • BTC price was no match for the greenback which rallied on the back of higher inflation numbers.
  • The outlook seems to be even more bearish than first thought, with 2024 now seen as the earliest for a turnaround.

Bitcoin (BTC) price dropped almost 10% on the back of stronger US inflation figures on Tuesday, when the whole market was positioned for a weaker number. In light of the release, markets had to reassess the new situation, which meant that any positive scenario for a return to normal conditions in 2023 got thrown in the bin. It looks like the Fed had it right all along, and markets will need to live for at least another year with high inflation still taking a massive bite out of the monthly household budget, and thus less disposable cash to spend on cryptocurrencies.

BTC price  set to enter a 15-month dry-spell

Bitcoin price is set to slip back below $20,000 any time soon as with Tuesday’s inflation figures it does not look like inflation will go away anytime soon. Projections on the back of Tuesday point to at least another 15 months of elevated inflation, which means no big cash push into cryptocurrencies. This is because inflation is eating up your and my monthly budget and what we have available to spend on food, materials and investments like cryptocurrencies, with a result that Bitcoin price is likely to trade sideways to lower until inflation finally hits more normal levels. 

BTC price is currently still above $20,000, although it is just a matter of time before analysts come out in favour of higher rate hikes from the Fed, with a 100 bps hike already pencilled in for next week. This spiralling hiking cycle, will lead to monetary conditions tightening, and even less cash being allocated towards cryptocurrencies. This means that soon bulls will turn their back even more away from cryptocurrencies, with BTC prices set to trade back around $19,036.

BTC/USD Daily chart

BTC/USD Daily chart

That said, several data points still set to be issued in the coming days could dilute the effect of the inflation number from Tuesday. In addition, Europe is stepping up its game against the energy crunch, with the ECB entering its most hawkish mode in over two full decades. This could overcome the mighty dollar and see it weaken, which would be good news for cryptocurrencies as at least one tail risk will fade away and offer BTC price room to rally towards $23,000.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

IRS says crypto staking should be taxed in response to lawsuit

IRS says crypto staking should be taxed in response to lawsuit

The IRS stated that rewards from cryptocurrency staking are taxable upon receipt, according to a Bloomberg report on Monday, which stated the agency rejected a legal argument that sought to delay taxation until such rewards are sold or exchanged.

More Cryptocurrencies News
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode

Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode

Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.

More Solana News
Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses

Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses

Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.

More Ethereum News
Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery

Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery

The global cryptocurrency market cap shrank by $500 billion after the Federal Reserve's hawkish statements on December 17. Amid the market crash, Bitcoin price declined 7.2% last week, recording its first weekly timeframe loss since Donald Trump’s re-election. 

More Cryptocurrencies News
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP