Bitcoin (BTC) extended its decline since Wall Street opened on September 11, as the cryptocurrency market failed to rally despite positive U.S. macroeconomic data.
Bitcoin Gives Up $56,000 as CPI Eases Inflation Fears
Data from Cointelegraph Markets Pro and TradingView tracked BTC price movements as daily losses exceeded 3% due to selling in the United States.
Currently below $56,000, BTC/USD ignored the August Consumer Price Index (CPI) numbers, which showed inflation slowing as expected, at 0.2% monthly and 2.5% annually, according to data from the U.S. Bureau of Labor Statistics.
“The overall items index rose 2.5% in the 12 months ending August, the smallest 12-month increase since February 2021,” the accompanying press release said.
CME Group’s FedWatch tool reflects changes in market expectations about how the Federal Reserve will cut rates at its September 18 meeting.
At the time of writing, the odds of a modest 0.25% rate cut were 85%, compared to 66% the day before.
Despite this, Bitcoin traders appeared in no mood to celebrate the first U.S. interest rate cut since 2020.
Popular trader Roman confirmed that he is waiting for a retest of $55,000, while social media commentators also noted that liquidity is forming around $54,000.
According to data from monitoring resource CoinGlass, sell orders increase above $57,000.
Only the longer timeframes offered cause for optimism, as fellow trader Titan of Crypto uploaded Ichimoku cloud data to X, showing that the weekly chart for BTC/USD still holds support.
BTC price action indicates a “risk-off environment”
Meanwhile, in a recent weekly report sent to Cointelegraph, on-chain analytics platform CryptoQuant warned that Bitcoin has lost its correlation with gold.
Related: Is Cryptocurrency Entering a Bear Market? — 5 Things to Know About Bitcoin This Week
BTC price action was in marked contrast to XAU/USD in August, with the latter hitting new all-time highs in dollar terms.
“Bitcoin has decoupled from gold. Bitcoin prices have fallen at the same time that gold prices have hit new all-time highs, causing the correlation between the two prices to turn negative,” he wrote.
“A period of negative correlation between Bitcoin and gold, where gold is rising and Bitcoin is falling, typically indicates a risk-averse environment where investors are preferring traditional safe haven assets like gold. Bitcoin has followed the stock market in its decline.”
CryptoQuant also noted that the dollar’s strength is declining along with Bitcoin, which is a rare occurrence.
“Both a weaker dollar and a declining bitcoin could signal broader risk aversion or financial stress, even as the dollar loses strength against other major currencies,” he argued.
“This could happen at a time when global markets are facing uncertainty and investors are fleeing riskier assets like bitcoin and the U.S. dollar.”
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