Bitcoin slips below $63,500 as FedWatch sees 60% odds of September hold

Bitcoin below $63,500 was the market’s immediate story on Aug. 12, even after U.S. inflation data arrived in line with expectations. Cointelegraph reported that BTC erased its gains for the day around the Wall Street open, while CME FedWatch showed futures traders had raised the implied chance that the Federal Reserve would leave rates unchanged at its Sept. 16 meeting.

July’s Consumer Price Index rose 0.1% from June and 3.4% from a year earlier, according to the Bureau of Labor Statistics figures cited by Cointelegraph. The BLS said shelter increased 0.1% and represented roughly two-thirds of the month’s overall increase. Food also rose 0.1%, while energy fell 1.5%.

The juxtaposition is notable but does not establish that the inflation report caused Bitcoin’s decline. The available data show the price move and the change in rate-market expectations occurring on the same day.

What do September Fed hold odds mean?

CME FedWatch put the probability of keeping the current 3.50% to 3.75% target range unchanged at 59.9% as of 10:46:23 a.m. Central Time on Aug. 12. It placed the probability of a move to 3.75% to 4.00% at 40.1%.

Those figures are market-implied estimates, rather than a Federal Reserve forecast. CME says FedWatch derives its probabilities from 30-Day Fed Funds futures prices and uses assumptions including rate moves in 25-basis-point increments. A basis point is one-hundredth of a percentage point.

The probability of no change had been 51.6% one day earlier, 45.6% a week earlier and 30.4% a month earlier, according to CME’s snapshot. That sequence shows a marked repricing in futures-market expectations ahead of the September meeting, but it does not guarantee the Fed’s decision.

Bitcoin analysts focus on $63,000 and $65,000

Technical analysts cited by Cointelegraph saw other forces around Bitcoin’s price. Rekt Capital said rebounds from roughly $63,000 had become smaller, listing gains of 6.27%, 5.83%, 3.18% and 1.15% on successive bounces. That is the analyst’s assessment of a support level, a price area where buying has previously emerged, rather than a confirmed forecast of a break lower.

Bitfinex Alpha, the exchange’s research arm, identified $65,000 to $65,500 as a resistance zone. It said Bitcoin reached daily highs above $65,000 for six straight days between Aug. 5 and Aug. 10, but had not posted a daily close above that mark since July 26.

Options pricing also reflected caution, according to Andrei Grachev, managing partner at DWF Labs. He told Cointelegraph that end-of-August options with downside strikes near $60,000 cost more than comparable upside strikes near $70,000. The observation describes relative option prices, not a prediction of Bitcoin’s next move.

Traders were next watching the July Producer Price Index report due Thursday, which Cointelegraph said could bring further market volatility.

This story draws on original reporting from Cointelegraph.