Key Points
- Bitcoin (BTC) experienced increased volatility as it threatened to lose early week gains on May 14.
- The BTC price fluctuated between $61,440 and $63,450, with traders warning of a squeeze if Bitcoin crossed $63k.
On May 14, Bitcoin (BTC) showed signs of instability, raising concerns about it potentially reversing the gains it had made earlier in the week. The BTC price fluctuated, dipping to $61,440 on Bitstamp.
The day before, BTC had reached a high of $63,450, a level at which shorts were at risk. Trading resource Material Indicators cautioned that if Bitcoin surpassed $63k, overleveraged shorts would likely face a squeeze.
Bitcoin’s Volatility and Market Reactions
However, the bulls failed to gain momentum. At the time of writing, a large portion of liquidity had been drawn to the downside, as per CoinGlass data. Material Indicators pointed out that bids were strengthening at $60,000 and $65,000 in anticipation of economic reports from the United States.
These reports were expected to include the Producer Price Index (PPI) print, along with remarks from Jerome Powell, the Federal Reserve Chair. It’s not uncommon for ‘guardrails’ to be placed in the order book ahead of such events and for them to be withdrawn at the last minute.
Bitcoin has shown a tendency to neutralize liquidity both above and below the spot price while staying within a narrow range since the end of April. Financial commentator Tedtalksmacro highlighted the potential impact of the PPI numbers, revealing an unusual setup.
Impact of PPI and CPI Data
Tedtalksmacro noted that the PPI would precede the Consumer Price Index (CPI) readout for April, presenting traders with a rare scenario that does not account for wildcard misses in the data itself.
He stated, “Today is a rare occasion where US PPI data is released the day prior to CPI data. PPI + CPI data have a very strong correlation. PPI leading the way for CPI numbers historically. Thus expect the market to react more significantly than usual on any miss on expectations.”
Data from CME Group’s FedWatch Tool emphasized the need for significant surprises to shift market expectations of an interest rate cut from the Fed coming any sooner than September. The odds of a 25-basis-point cut at the June meeting of the Federal Open Market Committee, or FOMC, stood at just 3.5% at the time of writing, with 24.6% for the July meeting.
