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September 13, 2022

What CPI Inflation Data Is Doing to Crypto and Stocks Market

The crypto and stock markets are suffering after the September 13 inflation data revealed an unusually high headline inflation rate of 0.1% month-over-month growth.

Even as gas prices fell to multi-month lows and the housing market cooled, core inflation rose 0.6% month-over-month and is 8.3% year-over-year.

While market players and investors believed that the next Federal Reserve interest rate rise would be a hefty 0.75 basis points, many also maintained the informal belief that the CPI data for September 13 would be weaker than anticipated.

Given that the market has reportedly “priced in” a 0.75 basis point (bps) raise, crypto traders anticipated Bitcoin (BTC), Ether (ETH), and other altcoins would break out to the upside.

Obviously, the exact reverse has happened.

The Dow sank around 2.6%, while the S&P 500 and Nasdaq each fell 2.9% and 3.0%. Naturally, risky assets also declined, and the Bitcoin price surrendered more than fifty percent of its weekend gains with a 9% decline to $20,350. Ether’s price fell 7.29 percent to $1,590 with only one day till the Merge, and the majority of top 100 cryptocurrencies are now suffering single- to double-digit losses.

While Bitcoin’s weekend bounce from September 9 continued into the beginning of this week and the price climbed as high as $22,800, the prior research warned that BTC was trading near a significant overhead barrier.

As seen in the table below, the multi-month resistance from BTC’s all-time high held as the price fell below $22,400 when the market opened and the monthly CPI data was released to the media. In addition, the research highlighted the “successive bear flag continuance” pattern that has been in effect since the Bitcoin price peaked at $69,000 on November 10, 2021.

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Unless some exceptionally positive Merge event occurs, the most probable trajectory for Bitcoin stays down.

Positively, despite the pullback on September 13, the Bitcoin price continues to oscillate within its 90-day range (pink box) between $25,400 and $17,200. From my perspective, there is nothing to see until the price falls below $18,500 or the annual low of $17,600.