Bitcoin Loses Out on Post-CPI Rally as Stocks and Gold Soar While Cryptos Fall

Bitcoin—up more than 30% in less than a month—has recently vastly outperformed the stock market, helped by an improving rate outlook as well as hopes that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF).

But that trend of outperformance was reversing on Tuesday, with the
Dow Jones Industrial Average
advancing 1.6% and the
S&P 500
up 2%, while Bitcoin briefly touched its lowest level in six days. This lag among cryptos came in the face of a macroeconomic catalyst that should have buoyed both stocks and digital assets: the latest U.S. consumer-price index (CPI) report, which showed that inflation came down significantly in October. 

The encouraging CPI print all-but rules out another rate hike from the Fed in December, and could shift the needle on expectations of whether the central bank will raise borrowing costs again any time soon. Cryptos, like stocks, have shown themselves to be sensitive to the rate outlook, because higher borrowing costs and greater returns on risk-free cash tend to dampen demand for riskier bets, like tokens and equities.

Another discouraging trend was seen as gold prices surged, with futures contracts tracking the yellow metal up 1%. Geopolitical risks from conflict in the Middle East had recently renewed calls of Bitcoin as a haven asset like gold, but that narrative, too, was fizzling out in Tuesday trading.

Nevertheless, technical analysis reveals that Bitcoin may still have momentum, and could continue to make gains if it can hold on to crucial price levels.

“Support for Bitcoin is at the rising 50-day moving average around $30,900,” said Katie Stockton, managing partner at technical research firm Fairlead Strategies. “The long-term outlook is improving.”

“Bitcoin thrusted higher last week, taking it above … resistance near $35,900. This sets up a breakout pending this Sunday’s finish above that level. A breakout would support a continuation higher toward secondary resistance near $42,200,” said Stockton, adding that an upward shift in one weekly technical indicator “suggests this level is achievable in the relatively near term.”

Beyond Bitcoin,
Ether
—the second-largest token, which has also benefited from hopes that the token could be held in an ETF—slipped3% to $2,050. Smaller cryptos or altcoins were more mixed, with
Cardano
down 1% but
Polygon
popping 2%. Memecoins were weaker, with
Dogecoin
and
Shiba Inu
shedding 4% each.

Write to Jack Denton at [email protected]