Favorable US inflation data failed to support Bitcoin. CryptoQuant analysts named weak spot demand as the primary reason.
Bitcoin Failed to React to Inflation Data
On August 12, the US Bureau of Labor Statistics published inflation data for July. After the publication, Bitcoin momentarily dropped from around $64,500 to $64,000. On August 13, the asset fell below $63,000.
At the same time, the July CPI data generally met market expectations, and the Producer Price Index (PPI) was better than forecast. PPI remained unchanged on a monthly basis, whereas analysts had expected a 0.2% increase, noted CryptoQuant.
The experts added that against this backdrop, the yield on US Treasury bonds decreased, and US stock indices rose. However, Bitcoin failed to form a rally and remained in the $63,000-$64,000 range.
Weak Demand
According to analysts, the main reason for this reaction is weak demand on the spot market.
The inflow of capital into US spot Bitcoin ETFs also remains low. At the same time, the Coinbase Premium Index, which reflects the difference between Bitcoin's price on Coinbase and other major exchanges, has remained predominantly negative since May.
The indicator is currently around -0.1%. CryptoQuant noted that this indicates limited buying pressure from US investors. Meanwhile, traders' positioning on the futures market remains relatively high.
Thus, an imbalance has formed in the market: weak spot demand, low liquidity, and a significant volume of leveraged positions, added the experts.
They believe that under such conditions, positive macroeconomic news may not trigger Bitcoin growth. If the price does not react to a favorable backdrop, traders may start closing margin longs, which creates additional pressure on the asset, the statement said.
Analysts separately named the $68,700 level as resistance — the approximate cost basis for Bitcoin's short-term holders. If the price approaches this level, recent buyers may start closing their positions.
In CryptoQuant's opinion, even the most favorable inflation data is insufficient to start a prolonged uptrend. To resume a stronger market rally, the following are needed:
- Resumption of capital inflows into US Bitcoin ETFs;
- The Coinbase Premium Index moving into positive territory;
- Growth in spot trading volumes;
- Bitcoin's confident return above $68,700.
Earlier, Glassnode identified conditions for a new Bitcoin crash.
