The digital currency is back around the $20,000 psychological level
The bitcoin price advanced towards $22,700 earlier in the week but failed to extend the ascent as the crypto market plunged in the aftermath of the US inflation report. The BTCUSD pair fell nearly 10% to find a local bottom around $19,600 before steadying.
The prices of most digital currencies fell after the CPI showed an increase in August, which has taken the annual figure to 8.3% versus 8.1% expected. The blow from inflation report was felt in the traditional financial markets as well, with Wall Street indices seeing their worst session since June 2020. Following massive sell-off, US stocks steadied on Wednesday as investors have digested the data.
The price of bitcoin also bounced slightly to add 0.25% yesterday. However, the largest cryptocurrency by market capitalization still lacks the momentum to stage a sustained and steady recovery, oscillating around the $20,000 psychological level on Thursday.
As indicators show, sellers keep dominating the market at this stage, with bearish risks persisting in the near term. Should the price fail to exceed the $20,500 zone on a daily closing basis, another sell-off could be expected.
Fundamentally, recovery attempts could be capped by fresh hawkish signals out of the United States. Stronger-than-expected inflation data boosted the likelihood of a 75- or even 100-basos-point rate hike next week by the Federal Reserve. If the central bank raises by 1%, the decision would pressure already struggling risky assets including the crypto space.
A failure to hold above $20,000 in the coming days would pave the way towards the $19,600-19,500 zone, followed by the $19,000 intermediate support on the way to the $18,500 region that capped the sell-off earlier this month.