Why is Bitcoin down today?

Bitcoin’s decline follows hawkish remarks from Federal Reserve Chairman Jerome Powell during his testimony before the Senate Banking Committee. Traders are also reducing risk ahead of the key U.S. inflation report on February 12. The price of Bitcoin must hold above a key support zone to avoid a deeper correction.

Bitcoin’s drop over the last 24 hours followed Powell’s forecast on interest rate policy for 2025.

Key Takeaways from Powell’s Speech:

• There is no urgent need to cut interest rates as inflation remains a concern.
• Lowering rates too quickly or aggressively could undermine progress in controlling inflation.
• Delaying or limiting rate cuts could slow economic growth and impact employment.

Market Reaction to Powell’s Statement:

• U.S. Treasury yields remained high, making traditional high-yield assets more attractive than riskier investments.

• Crypto markets retreated, with Bitcoin and altcoins experiencing sell-offs.
• The CME FedWatch Tool now shows a 95.5% probability that rates will remain unchanged at the March 19 meeting, up from 75.5% a month ago.

• Rate cuts are not fully priced in until September 2025.
• Fewer than two rate cuts are expected for the entire year, limiting upside momentum for risk assets.

Traders Reduce Risk Before Inflation Data Release

Bitcoin’s decline today seems to be a preemptive move ahead of the U.S. Consumer Price Index (CPI) release.

Key CPI Expectations:

• According to a Bloomberg survey, inflation likely remained stubbornly high in January.
• Economists expect core CPI (excluding food and energy) to rise 0.3% from December, per the Bureau of Labor Statistics.
• On a year-over-year basis, core CPI is expected to increase by 3.1%.

• Core CPI has risen 0.3% in five of the last six months, signaling a slowdown in disinflation progress.
• Higher-than-expected inflation could support the Fed’s patient approach to keeping rates elevated, tightening liquidity for crypto markets.
• Historical trends show Bitcoin often experiences short-term sell-offs around CPI releases, followed by sharp moves in either direction once the data is released.

Bitcoin Faces Strong Resistance at the 50-Day EMA

Bitcoin’s decline today followed a test of the 50-day Exponential Moving Average (EMA; red wave) around $98,200 as resistance.

Key Technical Observations:

• Bitcoin has repeatedly failed to break above the 50-day EMA since February 5.
• The 50-day EMA aligns with a key horizontal resistance level around $98,000.

Despite Corrections, Bitcoin Remains in a Larger Ascending Triangle

• A clear breakout above the 50-day EMA resistance could push Bitcoin towards the triangle’s upper trendline near $106,000.
• Conversely, a break below the lower trendline could bring BTC down to $88,000, aligning with the 0.382 Fibonacci retracement level.