How Bitcoin Bounced Back as Inflation Slowed Beyond Forecasts

At the Wall Street open on Nov. 14, Bitcoin (BTC) was aiming for $37,000 as the latest US inflation data failed to meet expectations.

CPI offers Bitcoin, stocks a pleasant surprise

Data from Cointelegraph Markets Pro and TradingView revealed that the BTC price was regaining strength as the Consumer Price Index (CPI) indicated a slowdown in inflation in October.

The CPI was 0.1% below the market forecast both year-on-year and month-on-month, with the annual change being 3.2%, compared to the 4.0% for core CPI.

“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,” a press release from the U.S. Bureau of Labor Statistics reported.

In contrast to October, where CPI was one of the inflation metrics that exceeded the market consensus, the situation was reversed. Stocks responded positively at the Wall Street opening, with the S&P 500 increasing by 1.5%.

“This is the 31st consecutive month with inflation above 3%. However, inflation appears to be on the DECLINE,” The Kobeissi Letter commented, although they are usually skeptical of the Federal Reserve’s policy in the current inflationary environment.

The reaction of Bitcoin to the CPI was relatively mild, reaching an intraday low before climbing back to $37,000 and remaining rangebound. According to Material Indicators, which monitors on-chain activity, the market was thin, which is necessary for volatility.

The data also showed that whales were not active on exchanges, and retail investors were increasing their exposure to BTC.

“It’s no coincidence that the 2 smallest order classes are buying,” Material Indicators commented on a BTC/USDT order book liquidity print from Binance, the largest global exchange.

Analyst: Accept BTC price retracements

At the time of writing, BTC was down around 4% from the 18-month highs previously seen, however, market participants still viewed the price action positively, noting that corrections within the uptrend were normal and healthy.

“Bitcoin already down 4.5% from the highs; bull market corrections are normal and healthy,” James Van Straten, research and data analyst at crypto insights firm CryptoSlate, informed X (formerly Twitter) followers on the day.

He referred to CryptoSlate analysis from Nov. 13, which suggested that deeper BTC price corrections could still come, given BTC/USD was up 120% year-to-date.

“It is important to remember that market corrections are a normal part of any financial cycle, contributing to the overall health of the market,” he stressed.

In an interview with Cointelegraph, Filbfilb, co-founder of trading suite DecenTrader, also predicted that Bitcoin could experience a notable drawdown prior to the April 2024 block subsidy halving event.