Bitcoin (BTC) dropped by $1,500 in minutes on May 11 as the latest United States inflation data delivered mixed sentiment on the economic outlook.
Bitcoin puts in fresh 10-month lows
Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD diving from $31,500 to abruptly pierce the $30,000 support as the Consumer Price Index (CPI) figures went live.
At 8.3%, CPI outpaced estimates by 0.2% but still fell 0.2% compared to last month’s readout. Reactions naturally began to focus on the idea that peak inflation may have passed.
“This is higher than the expectation, but it shows the first decrease in two years, as last month we’ve seen 8.5% inflation. Flattening and potentially the inflation has peaked,” Cointelegraph contributor Michaël van de Poppe wrote in part of a follow-up tweet.
Prior to the start of Wall Street trading, crypto markets nonetheless highlighted the prospect of a fresh downside for equities as major altcoins joined Bitcoin in heading south. Stock futures were also down.
The mood was already shaky, thanks to events surrounding the US dollar stablecoin, TerraUSD (UST), which took down huge numbers of positions as it lost its USD peg this week.
Pledges by Do Kwon, co-founder of creator Terra, to rebuild and restore the UST peg were released on social media hours before the CPI data.
“Terra’s return to form will be a sight to behold,” part of the concluding post in Kwon’s Twitter thread insisted.
His words, however, did not convince everyone, as analyst Dylan LeClair made clear in reply.
luna supply will dilute to infinity to try and reestablish peg, meanwhile shorts pile on driving it into the dirt, meaning it dilutes at lower and lower prices
guaranteed zero
crazy
— Dylan LeClair (@DylanLeClair_) May 11, 2022
whales on the move
For Bitcoin, meanwhile, the picture was barely any more positive than that at Terra.
Related: Terra ‘rescue plan’ still at large as LUNA falls below $5, Bitcoin spikes to ‘$138K’ in UST
Large-volume investors had put funds on the move in recent days, on-chain analytics resource Whalemap warned, notably those who had purchased BTC over $15,000 higher than at current spot price.
“A lot of whale activity yesterday,” the firm tweeted alongside a chart showing clusters of coins being relocated from wallets.
A lot of whale activity yesterday
Even the best of us were not prepared for drops like
Many whales that have purchased $BTC at 40k-34k prices were moving funds yesterday
ps last bubble is an exchange moving from 1 cold wallet to another so it can be ignored pic.twitter.com/7C2fmB99k1
— whalemap (@whale_map) May 11, 2022
As Cointelegraph reported, exchange balances saw a major increase during Bitcoin’s initial trip below $30,000, contrasting an overall buying trend. Previously, exchange reserves had been at their lowest since 2018.
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