Key Points
- Bitcoin’s price saw a correction ahead of the US inflation report and FOMC meeting, leading to a surge in long liquidations.
- Despite recent losses, market observers suggest Bitcoin’s historical performance indicates a potential recovery.
Bitcoin’s price experienced a correction to near $66,000 during the intraday trading session on 11th June, in anticipation of the US inflation report and the Federal Open Market Committee (FOMC) meeting.
Market Reaction to Economic Indicators
The cryptocurrency has since made a slight recovery, trading at $67,243 at the time of writing, according to CoinMarketCap’s data. Economists predict a modest increase of 0.1% from April in the May Consumer Price Index (CPI), which would still result in a 3.4% annual increase in prices.
The Federal Reserve is not expected to make any changes to interest rates. However, officials will take other actions like releasing quarterly updates to their Summary of Economic Projections, which could be influenced by the CPI report.
Impact on Bitcoin Traders
Bitcoin’s price decline on 11th June resulted in an increase in long liquidations in the futures market. Liquidations occur when a trader’s position is forcefully closed due to insufficient funds to maintain it. Long liquidations happen when the asset’s value suddenly drops, forcing traders who have open positions in favor of a price rally to exit their positions.
Despite these losses, market observers note that Bitcoin’s historical performance suggests a possible recovery. Pseudonymous crypto analyst Gumshoe observed that Bitcoin’s price declined 10% in the 48 hours before the four FOMC meetings held this year, but fully recovered on the day of the meetings.
Crypto analyst Jelle also shared similar sentiments, stating that the past four FOMC events have coincided with local bottoms and resulted in over 20% rallies for Bitcoin.
