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Bitcoin stays shaky as US inflation data hits new high

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The US Consumer Price Index (CPI) has hit a fresh new high causing investors across the board to panic once again.

  • Experts believe that if BTC is able to hold ground around AUD$29K (US$19.6K), it will be able to muster positive financial momentum in the near term.
  • Bitcoin is currently down by more than 70% since achieving its all-time high last November.
  • The currency's share of the crypto market currently stands at 41%.

Bitcoin's price action has continued to remain volatile, with the digital currency having jumped from AUD$29,078 (US$19,750) to AUD$30,800 (US$20,795) over the past day alone. BTC is currently exhibiting a bi-weekly gain ratio of +5.1% while trading at AUD$30,600 (US$20,615).

The turbulence is compounded by the fact that the US Consumer Price Index (CPI) β€” a popular metric to gauge inflation levels β€” has hit yet another fresh high. As a result, BTC is now consolidating around its all-important AUD$29.5K (US$20K) psychological threshold. According to on-chain analytics provider Material Indicators, if BTC fails to hold on to its key support level of AUD$28,858 (US$19,600), it may dip quite radically in the near term.

With stocks and crypto remaining shaky, investors are gravitating towards the US Dollar. The USD index (DXY) is currently hovering around its highest levels β€” i.e. 108.5 β€” in nearly 2 decades, with the dollar severely outperforming other prominent currencies like the Japanese Yen, Euro, etc. The US Dollar Index measures the value of the American dollar against a basket of 6 foreign currencies. On the subject, popular market analyst and hedge fund manager Bill Ackman opined: "Implicitly the market expects a more aggressive Fed will push us into recession by year end and then cut rates in response."

Looking ahead, many pundits see Bitcoin scaling down to AUD$19.3K (US$13K), a figure that would coincide with an 80% drawdown β€” which was also witnessed over the course of the last 2 bear markets. Bitcoin is currently down 70% from its Nov 2021 all-time high value of AUD$100K (US$69K).

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Cost of mining BTC dips to 10-month low

Data shows that the price of mining a single BTC has dropped to a 10-month low. This is because hardware has become more efficient over the past couple of years and the currency's mining difficulty ratio has dipped by 6.7% since May. To this point, researchers for JP Morgan revealed that the cost of accruing a single BTC has dropped from AUD$35.6K (US $24K) to approx. AUD$19.3K (US$13K) over the last 45 days.

These numbers are at their lowest since September 2021, with lower BTC production costs potentially alleviating selling pressure on miners while maximising profitability levels. That said, some analysts believe that the dip in production costs might be viewed "as negative for the price of Bitcoin going forward".

Celsius files for bankruptcy

Crypto lending platform Celsius recently filed a Chapter 11 bankruptcy document revealing that the firm currently has a AUD$1,78B (US$1.2B) deficit. The company β€” which is helmed by CEO Alex Mashinsky β€” holds around AUD$6.38B (US$4.3B) in assets against AUD$8.17B (US$5.5B) in liabilities.

Mashinsky has signed a legal memorandum stating that his company will sell its mined Bitcoin β€” via its Celsius Mining Bitcoin mining operation β€” to "generate sufficient assets" in order to repay at least one of its loans as well as provide additional revenue for the company. The company expects a total of 15,000 BTC to be mined by the end of 2023.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

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