- 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
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.
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