Bitcoin Price Slump Continued as Fed Rate Cut Prospects Fade

Bitcoin’s price slid over 1.7% in the last 24 hours, falling below the $108,000 resistance level according to market data from Cointelegraph Markets Pro and Bitstamp, marking a third consecutive bearish daily trading session.

Broader Context Points to Higher Interest Rates

The shift in Bitcoin’s trajectory occurred during New York trading hours on June 11, coinciding with the release of US Consumer Price Index (CPI) data for May. The overall CPI came in at 2.4% year-on-year, slightly below the forecasted 2.5%. Core CPI data also beat expectations at 2.8%, against projections of 2.9%.

“Even as the overall inflation rate has dropped, prices for many necessities are still rising rapidly. Americans are sick of inflation.”
— The Kobeissi Letter commentary (@KobeissiLetter)

These figures, while positive for potential Fed rate cuts, highlighted persistent high inflation in specific crucial areas like utilities, insurance, food staples, and car repairs. Consequently, the US Dollar Index (DXY) dropped sharply to a multi-month low of 98.5, effectively eliminating the possibility of a June 18 Federal Open Market Committee (FOMC) rate cut.

Market indicators now show a near certainty that rates will remain unchanged at the June 18 meeting, with the FedWatch Tool forecasting a 99.8% probability of no action. The expected number of fundamental rate cuts in 2025 has been revised downwards to only two, with the earliest anticipated cut pushed out to September.

Attention is now turning towards the upcoming June 12 Producer Price Index (PPI) data release. Analysts anticipate a small increase of 0.2% month-over-month (Core PPI expected at 0.3%), while higher-than-expected PPI or any significant macroeconomic surprise could potentially exacerbate the current Bitcoin sell-off.

Technical Analysis: Resistance Holds, Support Tested

Having approached its all-time high near $112,000, Bitcoin now faces selling pressure near the historical congestion zone clustering around $108,800. Reclaiming this zone is crucial for bulls seeking to trigger further price discovery towards new highs.

The BTC/USD pair is currently forming a bullish flag pattern on the daily chart, with support holding near the $106,000 level (which represents the upper boundary of the flag). This pattern suggests a period of consolidation after a recent upward move.

The Relative Strength Index (RSI) has shown a notable decline, dropping to 56 from 64 over the past four days, indicating fading bullish momentum.

Failure to close above the $106,000 support level would likely invalidate the current bullish flag pattern. An ensuing drop would confine Bitcoin within this consolidation range, potentially leading to a temporary pause before the next directional move.

Michael van de Poppe of MN Capital characterized the recent price action as a correction that couldn’t overcome the psychological $110,000 barrier. He emphasized the consolidation nature of the pattern, noting that as long as BTC remains above the $106,000 level, there would be no need for concern about immediate downturns.

Market Outlook and Key Levels

Technical analysts caution that maintaining support above $106,000 is critical. A breach below this level could signal further downside, potentially confining Bitcoin within the established flag channel and possibly leading to consolidation before the next significant move. Conversely, successfully holding atop the $106,000 level and breaking higher could potentially allow Bitcoin to retest the $108,000 resistance zone and aim for new all-time highs.

Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.