New Developments in Bitcoin Price, but Risks Remain

One of the most important developments that has drawn the attention of investors in recent times is the volatility in the price of Bitcoin (BTC). Bitcoin took a sigh of relief following the announcement of a 3% inflation rate in the US, which came in lower than expected. While this news provided a temporary reprieve among investors, it may also carry some risks.

The Consumer Price Index (CPI) report announced yesterday, indicating a year-on-year increase of 3%, has reduced uncertainty in the market. This figure, which was below expectations of 3.1%, caused Bitcoin’s price to rise above the $110,000 level, reaching as high as the $112,000 range after the announcement. Nic Puckrin, the founder of Coin Bureau, described this report as the most impactful inflation report of the year. According to Puckrin, this report paves the way for the Federal Reserve (Fed) to extend its interest rate cut cycle.

This situation can serve as a significant catalyst for the resurgence of risk assets in the short term. However, BRN Research analyst Timothy Misir points out that this rise may not be permanent. Misir emphasizes that open positions in the options market are nearing record levels, which could trigger sharp movements in the liquidation zones around $114,000.

Long-term investors maintaining short positions could lead to a rapid reversal of short-term rallies. Misir stated that while the inflation report has alleviated policy uncertainty, structural vulnerabilities in the market continue to persist. Additionally, dolphin wallets holding between 100 and 1,000 BTC account for 26% of the total supply, which may cause buying pressure to pause temporarily.

Following the inflation data, spot Bitcoin ETFs have found limited support from inflows, while outflows from Ethereum (ETH) funds have continued. Analysts suggest that if the price of Bitcoin exceeds $116,500, a new record could be on the horizon. However, potential ETF outflows or macro shocks have the potential to pull the price back into a consolidation zone. Concerns that the next CPI report may not be published due to a government shutdown have also created unease in the markets. Experts indicate that this situation could delay Fed policies and cryptocurrency regulations, thus increasing uncertainty in the crypto market again.