Bitcoin Against The Grain: The Downturn Continues Despite The Good Signals.

Bitcoin struggles to capitalize on recent U.S. economic data. Despite an expected slowdown in inflation, the leading cryptocurrency fell by over 3% this Wednesday, dropping below the $56,000 mark.

An apparently favorable macroeconomic context

The Consumer Price Index (CPI) in the United States increased by 2.5% year-on-year in August, the smallest rise since February 2021. This data, published by the Bureau of Labor Statistics, confirms a moderation in inflation in line with economists’ forecasts.

Paradoxically, this news was not enough to support Bitcoin’s price. The flagship cryptocurrency thus fell below $56,000, ignoring what could have been perceived as a positive signal for risk assets. Traders appear to have already priced in these expectations.

The CME Group’s FedWatch tool now reflects an 85% probability of a 0.25% interest rate cut at the next Federal Reserve meeting on September 18, up from 66% the day before. However, this prospect of monetary easing has also failed to reverse Bitcoin’s downward trend.

A decoupling revealing a risk aversion

CryptoQuant’s analysis platform highlights an alarming phenomenon in its latest report: the decoupling between Bitcoin and gold.

“A period of negative correlation between Bitcoin and gold, with a rise in gold prices and a fall in Bitcoin, generally signals a risk-averse environment“, explains the analyst.

This trend is part of a broader context where even the weakening of the dollar is failing to support Bitcoin’s price. CryptoQuant interprets this situation as a sign of “broader risk aversion or financial stress” in global markets.

Arthur Hayes, former CEO of BitMEX, provides further insight into this paradox. According to him, the anticipated Fed rate cut might actually be a bad omen for Bitcoin. This analysis suggests that investors might perceive the accommodative monetary policy as a sign of economic weakness rather than an investment opportunity.