New US inflation data could increase pressure on bitcoin

Sales put heavy pressure on bitcoin quotes on Monday. The prices decreased by more than 5%, falling below the level of 90 000 for the first time since mid-November. Although most of the drawdown was redeemed by the end of the trading session, the bears clearly do not intend to admit defeat and will demonstrate their power again. Unless the price of the main cryptocurrency is higher than 97 000, the most possible scenario is another downward momentum with a test of the 92 000 level.  

According to Bloomberg, investors withdrew about $1.6 billion from US bitcoin ETFs over the past four trading days. The number of those willing to increase long positions before Donald Trump's inauguration seems to be small. On the contrary, his official return to the US presidency may cause profit taking in the cryptocurrency market by those who made purchases before the autumn rally. 

Fairlead Strategies LLC analyst Katie Stockton highlights the current bitcoin correction phase. According to her estimates, the main cryptocurrency has a potential to fall down to 87 500. A chief analyst at FxPro Alex Kuptsikevich sees the levels of 91 600 and 88 000 as strong supports. If the quotes overcome these thresholds, the price of bitcoin risks decreasing to $74 000. 

Local pessimism among cryptocurrency holders can be deepened by tomorrow’s release of US inflation statistics for December. Bloomberg experts are expecting only minimal monthly deceleration in price growth, while the annual rate will remain 3.3% for the fourth time in a row. Progress in the fight against inflation has stalled, which speaks in favor of stopping the Fed's monetary easing cycle. It will cause a significant negative impact on risk assets including cryptocurrencies. 

In the next few days, bitcoin sellers may lower the prices to 92 000, which might be followed by the struggle for the 90 000 level. 

Consider the following trading strategy:

Sell BTCUSD at the current price. Take profit – 92 000. Stop loss – 97 000.