by • Bitcoin price shies away from $25,000 as the US dollar strengthens and questions about inflation arise.
• The U.S. Producer Price Index (PPI) data released on Feb 16 exceeded expectations, causing a ripple effect that led to a retracement of Bitcoin’s latest gains and liquidation of 80 million in BTC shorts.
• The S&P 500 and Nasdaq Composite Index dropped 1.1%, while the U.S. Dollar Index rose above 104.1, its highest level since early 2021.
BTC Price Cools As Dollar Strengthens
Bitcoin price shied away from $25,000 at the Wall Street open after fresh macroeconomic data from the United States overshot estimates, causing a ripple effect across markets and leading to a retracement of BTC’s latest gains as well as liquidation of $80 million in shorts on Bitcoin alone.
Unexpected PPI Data Rattles Markets
Data showed that January’s U.S Producer Price Index (PPI) was hotter than expected with headline figures coming in at +0.7% MoM vs +0.4% expected, and 6% YoY vs 5.4% predicted.. Core US PPI also failed to meet expectations with +0.6% MoM versus +0.2%, and 4.5% YoY compared to 4% estimated by analysts.. This news sent shockwaves through markets with both the S&P 500 and Nasdaq Composite index dropping 1%.
US Dollar Bolstered By Hot Data
The US Dollar also gained strength due to this news as it rose above 104 level for the first time since early 2021.. This was likely due investors favouring safe-haven assets amid fears of further economic weakening caused by hot PPI data.. Meanwhile Bitcoin saw an increase in short positions being liquidated over two days – peaking at $65 million on Feb 15th – its most seen since Jan 20th this year .
Inflation Fears Weigh On Crypto
Questions surrounding inflation also weighed on sentiment regarding cryptocurrencies like BTC as traders grew wary whether such digital assets could withstand potential hikes in consumer prices down the line.. These factors were responsible for cooling off BTC/USD which had previously trended towards $24,000 before the release of PPI figures .
Summary
To summarise, fresh macroeconomic data from the United States led to a selloff across markets resulting in BTC/USD cooling off from its previous bullish momentum towards $24,000.. This coincided with an increase in USD strength which was bolstered by unexpected hot PPI numbers raising questions about possible inflationary pressures.. In addition, there was an influx of short positions being liquidated on Bitcoin totaling up to $80 million over two days – reaching its peak at 65 million on Feb 15th .
