Historical Bitcoin gains disappeared hours later: Here’s why
Traders send mixed signals after Bitcoin fell to $117,000 a day after reaching new all-time highs.
Bitcoin
BTC
€100,062
faced strong rejection after hitting an all-time high of $124,089 on Thursday. The drop below $117,500 triggered $227 million in liquidations of leveraged long positions, although derivatives metrics were not significantly affected by the move.
Are traders overreacting to the U.S. inflation data, or is there something within the cryptocurrency market that is preventing a clear breakout above the $122,000 level?
The annualized premium of BTC futures was barely affected by the $6,630 drop. The indicator currently stands at 9%, within the neutral range of 5% to 10%. This suggests that the recent all-time high was not driven by excessive leverage and that traders remained relatively calm despite the drop below $118,000. Still, the data hints at a lack of confidence in a rally toward $150,000.
Is higher inflation behind Bitcoin's drop?
Some might argue that the annual increase of 3.3% in the U.S. Producer Price Index (PPI) for July pushed traders to be more risk-averse, as the inflation figure turned out higher than expected. The initial negative reaction reflected lower odds of multiple interest rate cuts. However, the S&P 500 eventually erased its intraday losses, indicating that Bitcoin's sharp correction was likely driven by other factors.
