TradingKey - Higher-than-expected US October CPI sparks rate hike concerns; BTC slumps 2%, kicking off the battle to defend $70,000.
On November 11, Bitcoin (BTC) plunged following the release of CPI data, tumbling 2% in short order to break below $73,000 and dropping as low as around $72,787 to hit its August 21 low, putting the previously defended core $70,000 threshold in severe jeopardy.
Data released yesterday by the U.S. Bureau of Labor Statistics (BLS) showed that the October CPI rose 0.4% month-over-month, higher than the market expectation of 0.3%; core CPI, excluding food and energy, rose 0.3% month-over-month, also exceeding the market expectation of 0.2%.
Following the data release, market expectations regarding the Federal Reserve's policy stance for the December 9 FOMC meeting turned sharply hawkish, with futures-implied probabilities of rate hikes and expectations for the duration of elevated interest rates surging significantly. In addition, the 2-year U.S. Treasury yield surged 14 basis points to around 4.69%. The anticipation of tighter liquidity dealt a direct blow to non-yielding and highly leveraged assets, triggering broad-based losses across cryptocurrencies.
In addition, Federal Reserve officials voiced hawkish stances regarding interest rate hikes. Among them, Fed Governor Christopher Waller stated that inflation remains too high and shows signs of spreading. He explicitly noted that if core inflation fails to cool, the Fed should consider raising interest rates by 50 basis points at its December policy meeting. Meanwhile, Fed Vice Chair Bowman warned that inflationary pressures stemming from energy prices, tariffs, and large-scale AI-related investments could significantly delay the timeline for inflation to return to the 2% target.
The dashed hopes of Fed rate-cut dividends and liquidity tightening driven by hotter-than-expected inflation shattered market illusions of monetary easing, sending the US Dollar Index and Treasury yields surging in tandem and sharply tightening Bitcoin's liquidity. In the few hours around the CPI release, crypto market liquidations across the network once again exceeded $630 million, with long positions accounting for over 80%. These liquidations triggered mandatory market orders, amplifying the downward move.
Bitcoin is currently testing its long-term bull-bear dividing line (the 200-day MA), corresponding to a price range of $71,500–$72,500. If bulls can establish a solid base above this line, hopes for a swing recovery remain alive.
Bitcoin price chart, Source: TradingView
However, if the U.S. Producer Price Index (PPI) to be released on November 13 and the Fed minutes to be released on November 18 continue to deliver hawkish signals, Bitcoin's daily candle body will very likely break below the key $70,000 mark. Technically, this would trigger secondary stop-loss selling, creating a strong likelihood of a direct drop to test the long-term support zone at $68,000.
