Bitcoin Slumps in Response to U.S. CPI Data

Bitcoin (BTC) experienced a 2.3% decline in the last 24 hours, retracting the brief gains seen after a spike following the latest U.S. Consumer Price Index (CPI) readings. The broader crypto market was also affected by this downturn.

Core CPI for June showed a 3.3% increase, slightly below the expected 3.5%. This had initially been perceived as bullish for risk assets like cryptocurrencies. However, the market reaction was more of a “buy the rumor, sell the news” scenario, as prices had already been driven up in anticipation of a positive report, as indicated by analysis firm Santiment.

Following a brief trade above $59,000 on Thursday, BTC dropped to $57,000 on Friday during the European afternoon. This decline was mirrored by other major tokens; for instance, ether (ETH) and Binance Coin’s BNB decreased by 2.2%, while Solana’s SOL and Dogecoin (DOGE) experienced losses of up to 5%.

The CoinDesk 20 (CD20), a prominent index of the largest tokens by market capitalization, recorded a 2.48% decrease, signaling widespread losses in the market. Among major tokens, only XRP showed a positive movement with a 5% gain in the past 24 hours, according to available data.

Market observers suggest that the current price stagnation may be influenced by various factors, including ongoing sales pressure from defunct exchange Mt. Gox and the German state of Saxony. Despite these challenges, some positive developments, such as CME and CF Benchmarks introducing indices and reference rates for XRP, have the potential to boost institutional adoption of cryptocurrencies.

Analysts like Alex Kuptsikevich, FxPro senior market analyst, believe that significant gains in major tokens may be on hold until Bitcoin makes a decisive upward move. Kuptsikevich noted the impact of German authorities selling off previously confiscated Bitcoins, which could be deterring some potential buyers from entering the market.

The state of Saxony made a notable transfer of over $600 million worth of BTC to exchanges on Thursday, marking one of the largest movements in recent weeks. Data from Arkham shows that more than 3,000 BTC were transferred to various exchanges and over-the-counter (OTC) trading firms in the early Asian hours on Friday, leaving approximately 6,000 BTC in state wallets, valued at $340 million at current prices.