Bitcoin's recent surge and subsequent correction
Bitcoin (BTC) experienced a surge in price, reaching above $37,000 between Nov. 10 and 12. However, the cryptocurrency faltered and underwent a correction toward $35,000 on Nov. 13. This sudden movement resulted in the liquidation of $121 million worth of long futures contracts. While Bitcoin's price stabilized around $35,800 on Nov. 14, investors are left wondering why this downturn occurred.
Inflation data and government shutdown impact on BTC price
One factor behind Bitcoin's price movement was the unexpected softening of United States inflation data on Nov. 14. The U.S. Consumer Price Index (CPI) showed a 3.2% increase in October compared to the previous year, leading to a decline in yields on U.S. short-term Treasurys. This triggered buying activity in traditional assets, potentially reducing the demand for alternative hedge instruments like Bitcoin. Additionally, political developments surrounding U.S. government shutdown threats could also influence Bitcoin's performance.
Spot Bitcoin ETF expectations and regulatory scrutiny
The cryptocurrency market experienced a negative reaction to a fraudulent BlackRock XRP trust filing on Nov. 13. While this event is not directly linked to Bitcoin, it has drawn regulatory scrutiny to the crypto sector at a sensitive time when numerous spot Bitcoin ETF applications are awaiting review by the U.S. Securities and Exchange Commission (SEC). The outcome of these reviews will have an impact on the cryptocurrency market.
Fear of global economic recession
The drop in Bitcoin's price after reaching the $37,000 level cannot be attributed to a single event. Investors may have reassessed their positions, considering Bitcoin's substantial market capitalization of $725 billion. Additionally, concerns over global economic growth and the Federal Reserve's strategy for a soft economic landing contribute to the unfavorable landscape for Bitcoin's value. The potential delay of decisions on spot BTC ETFs by the SEC also aligns with market expectations.
This article is for general information purposes and should not be taken as legal or investment advice. The views expressed here are the author's alone and do not necessarily reflect the views of Cointelegraph.
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