May 14, 2024
Bitcoin's at $61,521, Downturn Amid Federal Reserve Expectation
Bitcoin price today

Bitcoin’s at $61,521, Downturn Amid Federal Reserve Expectation

Tuesday, May 14, 2024: Bitcoin Price Today is $61,521, experienced a downturn after reaching as high as $63,450 yesterday, prompting caution amidst Federal Reserve anticipation. This volatility added uncertainty to the market as traders observed the potential for overleveraged shorts to face significant losses if BTC could surpass the $63K mark.

BTC/USD 1-hour chart. Source: TradingView

Despite initial optimism among bulls, momentum faltered, leading to a substantial decrease in liquidity, as reported by CoinGlass.

Market Sentiment and Economic Reports

Traders closely monitored bids strengthening at $60,000 and $65,000 in anticipation of economic reports from the United States, particularly the Producer Price Index (PPI) print and remarks from Jerome Powell, the chair of the Federal Reserve.

Bitcoin liquidation heatmap (screenshot) as of May 14. Source: CoinGlass

Material Indicators highlighted the phenomenon of ‘guardrails’ in the order book before significant events such as Fed speeches and economic releases. Bitcoin’s recent pattern of neutralizing liquidity around the spot price since late April added to the anticipation surrounding the upcoming data.

“It’s also not uncommon to see them get pulled at the last minute.”

Market Expectations and Federal Reserve Outlook

The release of the Producer Price Index (PPI) data preceding April’s Consumer Price Index (CPI) presented a rare situation for traders.

“PPI + CPI data have a very strong correlation. PPI leading the way for CPI numbers historically. Thus expect the market to react more significantly than usual on any miss on expectations.”

Analysts pointed out that significant deviations from expectations would be necessary to influence market expectations regarding a potential interest rate cut by the Federal Reserve before September. According to data from CME Group’s FedWatch Tool, the probability of a 25-basis-point cut at the June meeting of the Federal Open Market Committee (FOMC) was only 3.5% at the time of reporting, with slightly higher odds of 24.6% for the July meeting.

U.S. PPI vs. CPI data. Source: Tedtalksmacro

By closely monitoring economic indicators and Fed commentary, traders navigated the intricate dynamics of the Bitcoin market, while remaining cautious of potential shifts in market sentiment and expectations regarding monetary policy.

Image by Pete Linforth from Pixabay

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