Key Points
- Bitcoin [BTC] dropped below $58K after a softer June CPI data, mirroring US stock equities losses.
- Analysts project a bullish reversal for BTC, with a potential retest of $50K-52K before reaching the $64K target.
On June 11, Bitcoin [BTC] experienced a drop, reflecting the losses in US stock equities, particularly Big Tech, following a softer June CPI (Consumer Price Index) print.
BTC was unable to reclaim the $60K mark and fell below $58K subsequent to the release of the inflation data.
Inflation Data and Bitcoin
The June CPI data showed a slight decrease at 3.0%, compared to May’s 3.3%, indicating a slight easing in the overall weighted consumer price for goods and services.
This softer inflation could validate the recent disinflation trend, thereby increasing the chances of the Fed rate cuts later in the year, a move that could be beneficial for risk assets, including the crypto market.
However, post the CPI data release, investors reportedly moved out of Big Tech stocks, driving their prices down along with BTC, and instead invested in small-cap US stocks.
Small-Cap Outperformance and Bitcoin
Quinn Thompson, founder of crypto hedge fund Lekker Capital, suggested that the “small-cap outperformance” could potentially bolster Bitcoin’s recovery.
He stated, “Small cap outperformance tends to coincide with crypto strength. Let’s see if the macro can overpower the #Bitcoin supply overhang.”
The chart above depicted a positive correlation between the performance of small-cap stocks, tracked by iShares Russell 2000 ETF (IWM), and BTC.
As of press time, the chances of Fed rate cuts in September have increased to over 80% due to the softer June inflation.
However, the improving macro prospects could be negatively impacted by Bitcoin supply overhang, particularly from the German government sell-offs, as warned by Thompson.
As of July 12, German holdings were less than 10K BTC out of 50K BTC held in mid-June, indicating that its supply pressure could significantly decrease by the following week.
Bitcoin’s Future Price
With the potential easing of supply pressure, the upcoming Ethereum [ETH] ETF, and softer CPI, analysts from QCP Capital predict that BTC could break free from its current sideways movement.
Stockmoney Lizards, a renowned BTC analyst, suggests that a retest of $50K-52K could be possible before the $64K target is hit.
