BTC Loses Momentum: Fed’s Rate Cuts and Rising Inflation Push Bitcoin Into Consolidation Below $90K

BTC Loses Momentum: The Price Dips Below $87K as Inflationary Pressures Reignite Post-Fed Rate Cut

As bulls traded all-time highs for support retests on November 15, Bitcoin circled important local lows. At the daily close, data indicated that the price of Bitcoin had fallen below $87,000. The market resumed consolidating downward, and $90,000 and above remained out of reach as support after hitting fresh all-time highs on November 13.

As the Fed lowered interest rates, inflationary pressures resumed, according to the October Producer Price Index (PPI) print, the most recent inflation data from the United States. The Bureau of Labor Statistics reports that the PPI for October was 2.4%, which was 0.1% higher than forecast.

Both PPI and CPI inflation are now officially back on the rise with Core inflation above 3.0%. The Fed’s job is still far from done here.

The Kobeissi Letter

Rising Inflation Sparks Fed Policy Concerns: Will Stagflation Loom?

Fresh financial policy hawkishness brought on by rising prices resurfaced in traders’ minds, ostensibly problematic for risk assets and cryptocurrency. According to CME Group’s FedWatch Tool, the probability of another rate drop at the Fed’s December meeting was 58% on November 15 compared to 82% the day before. Kobeissi cautioned that stagflation, a new issue for the Fed, may result from weak labor markets and rising prices.

This is a nightmare situation for the Fed because it puts them in a lose-lose situation. If you raise rates, we head into a recession, if you cut rates, inflation rises even further.

Kobeissi

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