Bitcoin trends lower moving towards the bottom of a range created in July when the cryptocurrency scored a multi-year low at $17,600. Now, BTC seems poised for further losses on low timeframes as macro forces remain in control of global markets.
At the time of writing, Bitcoin (BTC) trades at $19,000 with a 1% and 3% loss in the last 24 hours and 7 days, respectively. Other cryptocurrencies are following the general sentiment in the market with many giving back their low timeframe profits apart from XRP.
Bitcoin Trapped Between Global Macro Forces
According to trading desk QCP Capital, after the Ethereum “Merge”, the migration from Proof-of-Work (PoS) to a Proof-of-Stake (PoS) consensus, was successfully completed, and the sector lost its final bullish narrative. Now, macro factors are the only thing exerting influence.
Thus, Bitcoin, Ethereum, and other cryptocurrencies are increasing their correlation with traditional assets and moving more and more in tandem with global economic forces. In that sense, the upcoming Consumer Price Index (CPI) print for September might put additional selling pressure on BTC’s price.
The U.S. Federal Reserve (Fed) is trying to combat the high levels of inflation, as measured by the CPI, by hiking interest rates and reducing its balance sheets. This is causing a negative effect on the value of almost every asset class except for the U.S. dollar. QCP Capital wrote:
USD continues to remain bid, as real returns on dollar outperforms every other asset class YTD. Commodities and Precious Metals showing grim figures (…). Amalgamation of global macro sentiment has driven correlations across assets back to extremes. BTC correlation with equities and gold (positively correlated) at all-time highs (…).
However, their attempts have been futile as inflation is proving resilient and might continue trending upward. The upcoming September CPI print, to be published this next Thursday, will proving more clues into the current macroeconomic situation. QCP Capital said:
In that regard, all eyes are on the Fed and by extension on CPI print this Thursday, where uncertainty remains high. Sell-side economists are predicting a rise of approximately 0.4% m/m and 6.5% y/y in core CPI, carried by strong shelter inflation.
If the Fed insists on hiking interest rates, Bitcoin is likely to trend lower in the short term. QCP…
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