Why Did Bitcoin Fall Again?…Pushed Down to the $76,000 Level by Inflation Shock

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Bitcoin (BTC) fell to the $76,000 level, pressured by hotter-than-expected U.S. inflation data and a massive liquidation of long positions. Over a 24-hour period, its price dropped by 1.90% to $76,674.33. With a correlation coefficient of 92% with the S&P 500, this decline appears to be more a result of a broader risk-off trend across risky assets due to macroeconomic shocks, rather than intrinsic cryptocurrency-specific negative factors.

According to CoinMarketCap, a cryptocurrency market data aggregator, on September 11 (local time), the U.S. Producer Price Index (PPI) for August rose by 5.4% year-over-year, exceeding market expectations of 5.3%. Immediately after this data was released, concerns about the Federal Reserve's (Fed) interest rate hike resurfaced, and the market's implied probability of a rate hike at the next meeting rose to 67%. Bitcoin plunged by over $1,000 within minutes of the announcement, getting caught in a risk-averse trend along with the stock market.

The decline was exacerbated by cascading leverage liquidations. Over $562 million worth of positions were liquidated across the entire virtual asset market in 24 hours, with long positions accounting for $484 million of that total. It is analyzed that excessively accumulated bullish bets were unwound all at once due to the inflation shock, with forced selling fueling further declines. Rising U.S. Treasury yields and international oil prices also increased concerns about tightening financial conditions, adding pressure on Bitcoin.

The market's attention is now shifting to the U.S. Consumer Price Index (CPI) to be announced on September 11. If the annual CPI aligns with market expectations of around 3.3%, Bitcoin may attempt to stabilize by recovering the 50% Fibonacci retracement level near $77,800. Should it surpass this level, the $78,900-$79,000 resistance zone has been suggested as the next target.

Conversely, if the CPI comes in higher than expected, the recent low of $76,670 could be tested again. If this support level breaks, the risk of a decline to the psychological support level of $75,000 could increase. The 14-day Relative Strength Index (RSI) is at 32.45, close to the oversold territory, which opens up the possibility of a short-term rebound. However, it is assessed that the key variables influencing the current direction are inflation and the Fed's policy expectations, rather than technical indicators.

The short-term outlook still shows a dominant bearish pressure. If Bitcoin defends $76,670, there might be room for a technical rebound after the inflation data release. However, if the CPI again exceeds market expectations, the correction could deepen to $75,000. The subsequent direction is likely to be determined by the Fed meeting and interest rate decision on September 15-16.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*