Bitcoin has collapsed 2% as the core CPI report indicates a rate of 3.3%, sparking a ‘buy the rumor, sell the news’ market reaction.
Santiment, a market intelligence platform, recently highlighted a significant development in the crypto market following the release of the US Consumer Price Index (CPI) report. The report indicates a core CPI rise of 3.3%, slightly below the anticipated 3.5%, which initially appeared bullish for cryptocurrencies.
📈📉 The US CPI report came out today with news of a core CPI 3.3% rise vs. 3.5% expected, appearing bullish for crypto. However, with many already anticipating a good report and prices being driven up in the days prior, this was a perfect 'buy the rumor, sell the news' event. pic.twitter.com/RqeE7L2eHv
— Santiment (@santimentfeed) July 11, 2024
However, this event turned into a classic ‘buy the rumor, sell the news’ scenario, driven by heightened market expectations and subsequent profit-taking.
Social Media Influence on Bitcoin Price
From July 4 to July 11, 2024, Santiment tracked social media mentions of terms like “CPI” and “inflation” alongside Bitcoin price movements. The data revealed a noticeable spike in social mentions around July 10, coinciding with a peak in Bitcoin’s price.
This period saw Bitcoin reaching a local top, followed by a sharp decline, reflecting a ‘buy the rumor, sell the news’ pattern. Investors had driven up prices in anticipation of a favorable CPI report, only to sell off and lock in profits once the news was confirmed.
Ethereum also experienced a significant price bounce, gaining 5% on July 11 and reclaiming the $3,200 territory. The dovish CPI report and upcoming Ethereum ETF launch contributed to this surge, indicating strong market optimism. However, ETH has since dropped 2%, giving up the $3,200 and $3,100 thresholds.
Impact of Federal Reserve’s Decision
It is important to remember Bitcoin’s price fell to $66,865 on Wednesday, June 13, following the US Federal Reserve’s decision to pause rate cuts, disappointing investors hoping for a H1 2024 reduction. On-chain data indicated how Bitcoin managed to hold above the critical $65,000 support level despite the downturn.
The broader crypto market continued its consolidation phase as bullish momentum from early June dissipated amid a hawkish shift in US macroeconomic indicators. Although the slowing CPI inflation hinted at a potential economic soft-landing, the Federal Reserve chose to maintain high interest rates after the June 12 FOMC meeting, further pressuring the market.
Bitcoin has since suffered selling pressure from Mt. Gox repayments and sales by the German government. The latest development has compounded the bearish pressure, with Bitcoin now trading for $57,218.
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