Bitcoin is hovering dangerously close to a key support level of $35,500 following a market correction triggered by the latest U.S. inflation figures. Although the Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI) data for October beat expectations and sparked a rally, the leading cryptocurrency has struggled to maintain its upward momentum.
The positive inflation news had a much different impact on U.S. stock markets, which saw an infusion of over $700 billion in value. Tech giants such as Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) were among the major stocks that benefited from the growth, highlighting a divergence in market dynamics.
Bitcoin‘s challenges in staging a rally are seen by some investors as a sign of a potential trend reversal. This is despite the fact that bitcoin is moderately correlated to major indices, with correlations of 0.25 and 0.33 to the S&P 500 and Nasdaq 100, respectively. However, most of the market inflows have been concentrated outside of the cryptocurrency sector.
Adding to the concerns of bitcoin investors, the Moving Average Convergence Divergence (MACD) is signaling a bearish crossover. This technical indicator is often used to gauge market momentum and potential reversals in asset prices, suggesting that bitcoin may be facing further downward pressure.
As traditional markets react positively to the latest economic data, the cryptocurrency market appears to be charting its own course. Investors will be watching closely to see if Bitcoin can hold the $35,500 level, or if it will succumb to bearish trends amid broader market gains.
