Bitcoin (BTC) has shed nearly 3% of its value in the past 24 hours, but bounced off strongly as it approached the $80,000 area following a hotter-than-expected inflation report in the United States.
Yesterday, the Bureau of Labor Economics (BLS) reported that core inflation in the country rose by 0.3% in September, exceeding analysts’ forecasts by 10 basis points.
Meanwhile, the annualized variation of the Consumer Price Index (CPI), including all items, hit 3.7%, rising by 30 basis points compared to the previous month and also surpassing the market’s consensus estimate for the period.
This catalyzed a strong selling spree that resulted in nearly $1 billion worth of long positions being liquidated in the futures market. Thus far, in just 4 days, $1.7 billion in bullish positions have been wiped out as a result of the strong decline that cryptos have endured.
Although Bitcoin’s performance has been relatively stable with a 1.7% loss in the past 7 days, altcoins like Ethereum (ETH) and Solana (SOL) have experienced much stronger retreats of 6.6% and 9.7%, respectively.
Net Inflows to ETFs Turn Negative as BTC Hit a Sell Wall at $85K
Net inflows to exchange-traded funds (ETFs) linked to the top crypto have turned negative in October after closing September in positive territory, with investors pouring $2.65 billion into these vehicles.
So far this month, net withdrawals stand at $540 million, implying a shift in sentiment as the market took a breather following the strong rally it experienced from September 15 to September 21.
Meanwhile, the main cause for the latest sharp drop may have been a revision of analysts’ projections for interest rates, as the odds of a rate hike in October increased from 22% to nearly 50% at some point after the inflation report came out.
However, they have dropped once again to 29% today ahead of the release of other important data points, including the monthly and annual variations of the Producer Price Index (PPI) in the United States.
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See all Bitcoin forecasts“Uptober” Still Possible If Bitcoin Recovers Above $83,000
Turning to the charts, we can see that BTC has entered a hot buy zone we identified weeks ago in another Bitcoin price prediction article. Ideally, the price action should bounce strongly off this level and resume its upward trajectory toward $85,000 in the next few days.
Nonetheless, the market will weigh on the latest inflation data and, depending on their assessment concerning the impact of this data on the Fed’s interest rate decisions, Bitcoin may either get a boost or break below this key level during what remains of the week.
Moving down to the 4-hour chart, if this strong rebound occurs, a long position right now would offer a risk-reward ratio exceeding 4x if the target is set at the nearest high of $87,000. This would be consistent with Bitcoin’s seasonal pattern for October — also known as “Uptober.”
Meanwhile, the expected return would be much higher if Bitcoin rises past this resistance and hits our short-term target of $90,000.
For a confirmed reversal, we would need the top crypto to rise past $83,000, breaking past the nearest lower high. The long wicks below $81,000 indicate strong demand at that level. Hence, we could witness a recovery in the next few days as long as bulls continue to defend that area.
