Hot CPI report puts a dent in Bitcoin and Ethereum rally, stocks also lose ground

Cryptocurrencies and stock markets are feeling the pain after the September 13 inflation report released an unexpectedly hot number that showed headline inflation rose 0.1% month-on-month.

Even with gas prices falling to multi-month lows and the housing market cooling, core inflation rose 0.6% month-on-month and year-over-year inflation stands at 8.3%.

While market participants and investors had expected the Fed’s next rate hike to be a hefty 0.75 basis points, many also settled on a loose assumption that the September 13 CPI report would be softer than foreseen.

Since the market had supposedly “priced in” a 0.75 bps rise, cryptocurrency traders expected Bitcoin (BTC), Ether (ETH) and select altcoins to break higher.

Well, apparently the complete opposite happened.

The Dow fell about 2.6%, while the S&P 500 and Nasdaq fell 2.9% and 3.6%, respectively. Of course, risk assets also fell and Bitcoin price gave up more than 50% of its recent gains over the weekend with a 9% return to $20,350. With just 1 day left before the merger, the price of Ether is also down 7.29% to $1,590 and the majority of cryptocurrencies in the top 100 are experiencing single to double digit losses right now.

While Bitcoin’s weekend rally since September 9 extended earlier this week and the price reached $22,800, previous analysis warned that BTC is also trading near a key overhead resistance.

As seen below, multi-month resistance from BTC’s all-time high held as the price collapsed to $22,400 when the market opened and monthly CPI data hit the media. The analysis also highlighted the “sequential bear flag continuation” trend that has been in place since Bitcoin price broke above $69,000 on November 10, 2021.

BTC/USDT 1 Day Chart. Source: TradingView

Barring an extremely bullish Merge event, the most likely direction for Bitcoin remains down.

One positive point to note is that despite the September 13th correction, Bitcoin price continues to decline around the 90-day range (pink box) between $25,400 and $17,600. From my perspective, there is “nothing to see here” until the price breaks below $18,500 or the yearly low of $17,600.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.