The crypto market faces a fresh blow as Bitcoin drops below $112,000. Speculations abound on the cause, with analysts attributing the decline to miners' massive sell-offs. However, the eagerly anticipated US inflation data could also be a key factor in play.
The Bitcoin (BTC) price fell below the symbolic $112,000 threshold during the night from Thursday to Friday last week. This sudden drop appears to be partly the result of massive Bitcoin sales by miners, occurring at the fastest pace in nearly 9 months.
Miner wallets tracked by Glassnode indeed show structural declines in their reserves between August 11 and 23. Since then, there have been few signs of new accumulation, indicating that miners seem content to sell their BTC at these price levels.
During this recent selling spree, no less than 4,207 Bitcoins, worth nearly $500 million, were liquidated over a period of just 12 days. This comes after miners had added only 6,675 BTC to their reserves between April and July.
These quantities remain relatively small compared to the holdings of companies like MicroStrategy or Metaplanet. However, miners’ actions often tend to significantly influence market dynamics.
Currently, Bitcoin investors seem primarily focused on the upcoming release of the Personal Consumption Expenditures (PCE) price index. This is the Federal Reserve’s preferred inflation indicator.
This indicator, expected today, could trigger significant volatility in the cryptocurrency market. The market currently estimates an 85.2% probability of a Federal Reserve interest rate cut in September.
However, if inflation proves more persistent than anticipated, this figure could decrease substantially. This is especially relevant as the US economy still appears to be on a positive trajectory, with consumer spending and growth recently exceeding expectations.
In this context, it’s not clear that interest rates should be lowered, unless Donald Trump expresses such a desire. It will therefore be crucial to closely monitor the evolution of these indicators and their impact on the cryptocurrency market.
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