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Despite the cooling inflation coming out of the US this week, Bitcoin (BTC) has failed to catch up on the rally in US equities and the global market. On Wednesday, July 12, top US indices like S&P 500 and the Nasdaq Composite touched their 15-month highs amid optimism over slowing inflation.
On the other hand, Bitcoin has been trading down 1.28% in the last 24 hours and is currently trading at $30,358 with a market cap of $589 billion. After a strong rally in June last month, the Bitcoin surge has stalled with the world’s largest cryptocurrency entering strong consolidation.
Tony Sycamore, a market analyst at IG Australia Pty, asked investors to maintain caution at this stage. Speaking to Bloomberg, Sycamore said:
“Bitcoin was an outlier in terms of widespread risk seeking in pretty much every asset class after the US inflation data. To me that’s not a good sign.”
He further added that the Bitcoin price could possibly fall to $25,000-$26,000, which is closer to its 200-day moving average, where it could see strong support.
Bitcoin and Nasdaq Correlation the Most Negative Since 2020
Reports on Wednesday suggested that the US Department of Justice has been selling some of the Bitcoins seized from Silk Road. This could also be one of the possible reasons behind the selling pressure on Bitcoin on Wednesday.
While other asset classes showed a move of optimism after the inflation data, Bitcoin and most of the top 100 cryptocurrencies lost ground. As per the Bloomberg data, the 40-day Bitcoin Nasdaq correlation has turned the most negative since 2020.
However, other analysts still have some optimism left for BTC. John Toro, head of trading at digital-asset exchange Independent Reserve said: “The disinflationary environment coming through after relatively quick interest-rate increases should be good for risk assets, including crypto. But suggestions that Bitcoin seized by the US are being moved around — which served to highlight the risk that some could be sold — hit sentiment.”
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