Bitcoin Falls Over 4% Following U.S. CPI Release, Market Sentiment Shifts

Bitcoin Experiences Significant Decline Following U.S. CPI Release

In a notable market shift, Bitcoin (BTC) has seen a decline of more than 4% over the past 24 hours, trading around the $58,000 mark during the afternoon hours in Asia on Thursday. This downturn has effectively retraced nearly all of the gains accrued over the previous week. As BTC led the charge in losses, other major cryptocurrencies followed suit; Ether (ETH) fell by 3.8%, while Solana (SOL), Cardano (ADA), BNB Chain (BNB), and Ripple’s XRP experienced slightly smaller declines of around 2.5%.

The overall impact on the crypto market was reflected in the CoinDesk 20 index, which tracks the largest tokens by market capitalization, showing a decrease of 3.5%. A significant portion of this drop can be attributed to the release of the latest consumer price index (CPI) figures for July, which were made public late Wednesday. The CPI for July recorded an increase of 2.9% year-on-year, matching expectations and marking the first time since 2021 that the rate has dipped below 3%.

Interestingly, despite the NASDAQ and S&P 500 recovering from an initial sell-off to end the day positively, Bitcoin’s price continued its downward trajectory following the CPI announcement. According to K33 Research, cryptocurrency prices have become increasingly sensitive to U.S. economic data in recent months, leading investors to favor stability over riskier assets during uncertain times.

Given the current market conditions, some traders anticipate that Bitcoin’s price could fall as low as $55,000 in the near future before potentially embarking on a recovery. Alex Kuptsikevich, a senior market analyst at FxPro, noted in a Thursday report, “A new sell-off momentum is still the prevailing scenario, with a potential pullback to $55K. However, data supporting the Fed’s imminent easing of monetary policy may encourage bulls to overcome the short-term downtrend and pave the way for a rise to $66K.”

In related news, U.S.-listed spot Bitcoin exchange-traded funds (ETFs) reported a notable $81 million in net outflows on Wednesday, concluding a brief two-day positive streak. Grayscale’s GBTC led the outflows with a substantial $56 million, followed by Fidelity’s FBTC with $18 million in outflows. Other notable losses included Ark Invest’s ARKB and Bitwise’s BITB, which saw decreases of $6.7 million and $5.7 million, respectively.

On a more positive note, Franklin Templeton’s EZBC and BlackRock’s IBIT were the only products to record net inflows, totaling a combined $6 million. In contrast, Ether ETFs performed better, achieving $10 million in net inflows and extending their streak to three consecutive days. BlackRock’s ETHA saw inflows of $16 million, while Grayscale’s ETHE experienced an equal loss of $16 million. Additionally, Grayscale’s mini Ether trust ETH, Fidelity’s FETH, and Bitwise’s ETHW collectively gained $11 million in inflows.