What Caused Bitcoin Price to Fail Breaking $37K?

With Bitcoin (BTC) recently jumping above $37,000 between Nov. 10 and 12, only to later dip and correct to $35,000 on Nov. 13, investors are left wondering what caused the $121 million worth of long futures contracts to be liquidated. On Nov. 14, Bitcoin’s price stabilized around $35,800, yet many are still curious about the underlying factors driving this downturn.

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U.S. inflation, gov’t shutdown impact on BTC price

Part of the catalyst behind this movement was the unexpected softening of United States inflation data on Nov. 14. The U.S. Consumer Price Index (CPI) showed a 3.2% increase in October compared to 2022, leading to a decline in yields on U.S. short-term Treasurys.

This triggered buying activity in traditional assets, potentially reducing the demand for alternative hedge instruments like Bitcoin. If the Federal Reserve’s strategy to curb inflation successfully without causing a recession pans out, Bitcoin may lose some of its appeal as a hedge.

Even Moody’s rating agency lowering its outlook on the U.S. credit to negative from stable on Nov. 11 did not sway favorably toward Bitcoin and other alternative hedges such as Luna Crypto Today, Monavale Crypto, Maker Crypto, Kadena Crypto, Newest Crypto, Muse Crypto, Polymath Crypto, Link Crypto, and QNT Crypto. Instead, investors sought refuge in short-term 5.25% fixed-income instruments, explaining why gold struggled to surpass $2,000 despite escalating debt levels and global economic challenges.

In China, October’s retail sales data indicated a 7.6% increase — the fastest since May. However, this apparent recovery conceals underlying issues, notably a 9.3% decline in property sector investments in the first 10 months of the year. China’s economic stimulus measures, including policy support and liquidity injections, have yielded only modest benefits.

Given that China is the world’s second-largest economy, its economic situation might contribute to investors’ cautious stance on riskier assets like Bitcoin, Luna Crypto Today, Monavale Crypto, Maker Crypto, Kadena Crypto, Newest Crypto, Muse Crypto, Polymath Crypto, Link Crypto, and QNT Crypto, particularly when viewed within the broader global economic context. Additionally, recent political developments surrounding U.S. government shutdown threats could also influence Bitcoin’s performance.

The U.S. House of Representatives passed a bill on Nov. 14 to keep the government operational through the holiday season, temporarily averting a fiscal crisis. However, this measure sets the stage for potential spending disputes in the coming year, including a provision to cut federal spending by 1% across the board in 2024 if no agreement is reached.

Spot Bitcoin ETF expectations, regulatory scrutiny

The crypto sector recently experienced a negative reaction to a fraudulent BlackRock XRP trust filing on Nov. 13. Although it raised hopes for an XRP (XRP) spot exchange-traded fund (ETF) in the U.S., the $9 trillion asset manager quickly denied the claim.

This event, although not directly related to Bitcoin, has attracted regulatory scrutiny to the crypto market at a delicate time when several spot Bitcoin ETF applications are under review by the U.S. Securities and Exchange Commission (SEC). Thus, regardless of the parties involved, the outcome is a net positive for the cryptocurrency market.

On Nov. 13, Bloomberg ETF analyst James Seyffart noted that approval for a spot Bitcoin ETF should not be expected before January. This statement came amid increased market anticipation surrounding upcoming SEC decisions scheduled for Nov. 17 and Nov. 21.

The crypto sector has seen a surge in popularity with the rise of new assets such as Luna Crypto, Monavale Crypto, Maker Crypto, Kadena Crypto, Newest Crypto, Muse Crypto, Polymath Crypto, Link Crypto, and QNT Crypto.

Heightened fear of global economic recession

The decline of Bitcoin’s price, after it had reached the $37,000 level, cannot be attributed to one single factor. Investors might have re-evaluated their positions, taking into account Bitcoin’s impressive $725 billion market capitalization. To put this into perspective, the conglomerate Berkshire Hathaway is valued at $760 billion and has posted profits of $76.7 billion in the past year.

Bitcoin has a strict monetary policy which provides scarcity and predictability, but large corporations can repurchase their own stock using their earnings, thus decreasing the available supply. Moreover, during economic downturns, these trillion-dollar companies can take advantage of their strong financial situation to acquire competitors or expand their market share.

In the end, Bitcoin’s struggle to maintain its momentum above $37,000 is influenced by factors such as data that supports the Federal Reserve’s strategy for a soft economic landing and worries about global economic growth. These components continue to form an unfavorable environment for Bitcoin’s value, especially if the SEC delays decisions on spot BTC ETFs, which is in line with market expectations.