Why did Bitcoin price go down today? BTC traders brace for $23K retest

Cointelegraph Team Cointelegraph

Bitcoin (BTC $23,439) headed toward $23,000 on Feb. 3 after a night of losses erased bulls’ latest progress.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Dollar rebound halts crypto party

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting lows of $23,329 on Bitstamp.

The pair had come off a second trip above the $24,000 mark at the Feb. 2 Wall Street open, with buyers failing to sustain momentum amid macro market volatility.

In classic style for interest rate announcements by the United States Federal Reserve, an initial move was soon countered, with Bitcoin returning to its prior position.

US Dollar Index (DXY) 1-hour candle chart. Source: TradingView

Conditions worsened thanks to a rebound in U.S. dollar strength, with the U.S. dollar index (DXY) putting in a conspicuous bounce, which it began to consolidate on the day.

“Once the DXY Dollar finds support and begins to bounce hard, then we will see pullbacks on our Crypto bags,” popular trader Crypto Tony warned.

Time to pay attention.

Cointelegraph contributor Michaël van de Poppe meanwhile eyed a level of 102 for DXY to spark inversely-correlated drops across risk assets.

“I do expect its likely DXY will retest what was support and now overhead resistance,” Matthew Dixon, founder and CEO of crypto rating platform Evai, continued in his own analysis.

This would align with my inverse expectation on Btc and Crypto moving down a touch before a final 'blowoff' high (not much higher imo).

U.S. dollar index (DXY) annotated chart. Source: Matthew Dixon/ Twitter

CPI presents fresh worry

Macro-induced price pressure could meanwhile linger through February, some believe.

In its latest market update sent to Telegram channel subscribers, trading firm QCP Capital drew particular attention to the next U.S. Consumer Price Index (CPI) print, set for release on Feb. 14.

“Post-FOMC, we have a heap of 2nd tier data releases including the important ISM services and NFP. However the decider will be the Valentine's Day CPI - and we think there are upside risks to that release,” it stated.

Firstly, the Cleveland Fed's inflation Nowcast is showing >0.6% print for Jan, even if it has overstated inflation the past few months.

Thanks to a change in the way CPI is calibrated, QCP suspected that forthcoming numbers later in 2023 could be higher than the market expects. Whether psychological or not, the net impact could disappoint crypto bulls.

“In Europe, a similar reweight has led to a surge in the January CPI released this week. Hence, we expect downside risks to materialize from here - either at this meeting, or after the next CPI release,” QCP added.

According to data from CME Group’s FedWatch Tool, meanwhile, consensus remained firm over the next rate hike in mid-March being identical to the February one at 25 basis points.