Why Did Bitcoin Fall After Hitting $90K Despite Lower US Inflation?
Bitcoin briefly surged to nearly $90,000 on June 13, 2024, coinciding with the release of US Consumer Price Index (CPI) data showing a lower-than-expected inflation rate of 3% year-over-year. Despite this seemingly positive macroeconomic signal, Bitcoin’s price quickly retraced, declining by several percentage points shortly after the announcement. Understanding this price behavior highlights the complex dynamics between inflation data, investor expectations, and other market forces currently shaping cryptocurrency volatility.
What happened
On June 13, 2024, the U.S. Bureau of Labor Statistics officially reported the Consumer Price Index, revealing a year-over-year inflation rate of 3%, which was below market expectations. On the same day, Bitcoin’s price reached an intraday high near $90,000. This initial surge has been interpreted by some analysts as market optimism that lower inflation could ease Federal Reserve rate hikes, potentially benefiting risk assets, including cryptocurrencies.
However, shortly after reaching this peak, Bitcoin’s price retraced by several percentage points. This decline occurred despite the favorable inflation data, suggesting other factors influenced investor behavior. Cointelegraph’s technical analysis points to profit-taking at the psychological $90,000 resistance level as a possible trigger for the short-term sell-off. Meanwhile, Bloomberg and MarketWatch analyses suggest that the positive inflation report may have already been priced in by the market, and that ongoing concerns about Federal Reserve hawkishness, regulatory uncertainty, and geopolitical tensions weighed on sentiment.
Institutional interest in Bitcoin remains present, as indicated by recent filings and public disclosures from major Bitcoin ETF issuers such as ProShares and Grayscale. These documents reveal a cautious stance influenced by regulatory clarity issues and macroeconomic uncertainty, which may contribute to volatility. Additionally, Bloomberg reports increased volatility in cryptocurrencies throughout 2024, driven by a combination of interest rate expectations, regulatory developments, and geopolitical factors.
Why this matters
The episode illustrates that Bitcoin’s price movements cannot be solely attributed to headline macroeconomic data such as inflation figures. While lower inflation might generally be expected to reduce the likelihood of aggressive Federal Reserve tightening, thereby supporting risk assets, the reality is more nuanced. Investor sentiment in cryptocurrency markets is shaped by a broader set of variables, including expectations of future monetary policy, regulatory environments, technical trading dynamics, and global geopolitical risks.
This complexity underscores the challenges in using traditional economic indicators as straightforward predictors of cryptocurrency price trends. The rapid reversal after hitting $90,000 despite positive inflation data suggests that market participants may be factoring in a range of risks and uncertainties beyond headline CPI numbers. For policymakers and market observers, this highlights the need to consider how evolving regulatory frameworks and macroeconomic signals interact with investor psychology and technical market factors in shaping crypto volatility.
What remains unclear
Several important questions remain unanswered due to limitations in available data and reporting. It is not clear to what extent non-inflation factors, such as Federal Reserve communications or specific geopolitical developments, directly influenced Bitcoin’s price decline immediately after the CPI release. The role of algorithmic or high-frequency trading in reacting to technical price levels versus fundamental news is also unknown.
Furthermore, there is no publicly available detailed order book data or institutional trading flow information around the CPI announcement that would allow precise attribution of the price moves. The breakdown of investor sentiment between institutional and retail participants during this episode is not documented. Additionally, no direct links have been established between regulatory announcements or geopolitical events and the timing of Bitcoin’s post-CPI price decline.
Overall, while post-event commentary offers plausible interpretations, causality between the inflation data and Bitcoin’s immediate price reaction remains inferred rather than empirically demonstrated.
What to watch next
- Upcoming Federal Reserve communications and policy decisions, which may clarify the trajectory of interest rates and influence risk asset pricing.
- Regulatory developments affecting Bitcoin and cryptocurrency markets, particularly any announcements from the U.S. Securities and Exchange Commission or other relevant bodies.
- Further institutional disclosures from Bitcoin ETF issuers and other large market participants, which may signal changes in market positioning or sentiment.
- Geopolitical events that could impact global risk appetite and market liquidity conditions, thereby affecting cryptocurrency volatility.
- Subsequent inflation and macroeconomic data releases to assess whether the 3% CPI figure represents a sustained trend or a temporary deviation.
Bitcoin’s price reaction to the June 2024 US inflation report highlights the multifaceted nature of cryptocurrency markets, where macroeconomic data interacts with regulatory, technical, and geopolitical factors. The absence of detailed trading data and clear causal links means that the exact drivers of short-term volatility remain partially opaque. As the market continues to evolve amid ongoing uncertainty, close attention to policy signals and regulatory clarity will be essential for understanding future price dynamics.
Source: https://cointelegraph.com/news/bitcoin-trips-at-dollar90k-despite-cpi-showing-curbed-us-inflation-what-gives?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.