Bitcoin Tests Local Lows Amid Rising Inflation Concerns

On November 15th, the Bitcoin (BTC) price dipped below $87,000, marking a key local low. The bulls, who had previously pushed prices to all-time highs on November 13th, struggled to maintain support as the market consolidated lower.

US PPI Sparks Stagflation Fears

Data from Cointelegraph Markets Pro and TradingView revealed that the Bitcoin price fell below $87,000 into the daily close. The latest US inflation data, released in October, showed a 2.4% increase in the Producer Price Index (PPI), exceeding expectations of 2.3%. This surge in inflation has reignited concerns about stagflation, a phenomenon where both inflation and economic stagnation occur simultaneously.

"The PPI and CPI inflation are now officially back on the rise with Core inflation above 3.0%," said The Kobeissi Letter’s trading resource X. "The Fed’s job is still far from done here."

Fed Rate Cut Odds Plummet

As a result of rising prices, traders’ consciousness has been reminded of fresh financial policy hawkishness. According to the CME Group’s FedWatch Tool, the odds of another rate cut at the Fed’s December meeting plummeted to 58% on November 15th from 82% the day prior.

Stagflation: A Nightmare Scenario for the Fed

Kobeissi warned that rising prices and a weak labor market could give the Federal Reserve a new problem: stagflation. "This is a nightmare situation for the Fed because it puts them in a lose-lose situation," he said. "If you raise rates, we head into a recession; if you cut rates, inflation rises even further."

BTC Price Faces ‘Aggressive’ Selling

With Bitcoin running out of steam on the back of the inflation figures and cool language from Fed Chair Jerome Powell, analysis urged protection of the area around $87,000. Trader Skew noted that "likely the same passive buyer in these 3 lows around $87K before it was finally taken."

Skew also spied an "aggressive seller trying to force" BTC/USD to lower levels. Meanwhile, Keith Alan, co-founder of trading resource Material Indicators, suggested that a return to the mid-$80,000 range might ultimately be cathartic for BTC price strength.

"A retest of support at $86k would be healthy for $BTC, and it will give us some insight as to whether the velocity of this ‘TrumpPump can be sustained for a soonish run at $100k or if momentum is going to cool off for more than 5 minutes," Alan told X followers.

Will Bitcoin Hit $100,000 Before Thanksgiving?

To reach its ultimate psychological target of $100,000, however, it needs to preserve a rising short-term trend line. If support fails at the line, price will search for support in the $75k – $76k range, warned Alan.

Market Analysis

  • Support levels: $87,000, $86,000
  • Resistance levels: $90,000, $100,000
  • Bullish indicators:
    • Rising short-term trend line
    • Increasing buying pressure
  • Bearish indicators:
    • Aggressive selling
    • Weak labor market
    • Stagflation fears

Conclusion

The Bitcoin price faces "aggressive" selling as stagflation fears mount. With the Fed’s job far from done, investors should be cautious and conduct their own research before making a decision. Explore more articles like this by subscribing to our Markets Outlook newsletter.

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Additional Resources

  • CME Group’s FedWatch Tool: Track odds of rate cut at the Fed’s December meeting
  • The Kobeissi Letter: Trading resource with in-depth analysis on markets and economy
  • Material Indicators: Trading resource with insights from Keith Alan and his team