It seems like there's no bottom in sight — So get used to dark times
On Oct. 13, the slightly higher-than-expected inflation data caused $Bitcoin(BTC.CC)$ to face a 4.4% price correction from $19,000 to $18,175 in less than three hours. The stock market also reacted negatively as the tech-heavy $Nasdaq Composite Index(.IXIC.US)$ moved down 3% after the inflation data was released.
It is worth highlighting that the dip under $18,600 lasted less than 5 hours. Bears were likely disappointed as a 6.3% rally took place soon, causing Bitcoin to test the $19,500 resistance.
The stock market roared back from losses soon as well.
Technical levels factored into the bounce. But more importantly, the prevailing bearish sentiment remained after the CPI inflation was announced. Consequently, whales and markers are less inclined to add leverage longs or offer downside protection. Considering the weak macroeconomic conditions and global political tension, the odds currently favor the bears.
It's been a tough year for risk assets across the board, and it's fair to blame the macroeconomic situation. A combination of factors has ignited a surge of inflation in developed economies and forced central bankers to react.
While the short-term reaction to the inflation report might inspire confidence from day traders, the general economic outlook remains bleak, and the high correlation between crypto and equities markets could translate for further downside for Bitcoin price if talk of higher interest rate hikes begins to dominate news headlines.
Global economic conditions suggest that markets — including the cryptocurrency market — have further downside ahead. Don't bank on a surge to new all-time highs in the months ahead.
Source: Bloomberg, Cointelegraph
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