Despite the positive reaction to the decrease in the rate of inflation last night, the price of Bitcoin fell after the publication of the rumor of the sale of some of the seized Bitcoins by the United States government. However, a review of the data from China shows that whales continue to buy Bitcoin as the market fears a possible recession.
According to NewsBTC, in this situation, only one group of investors did not show fear: whales. Big investors with lots of money are one of the most reliable indicators of when it’s time to buy Bitcoin. Anchin analyst Axel Adler says:
The process of accumulation and distribution of Bitcoin continues without change. Big players continue to buy bitcoins from smaller players.
The chart below shows how many investors with more than 5,000 bitcoins – alongside investors with less than 10 bitcoins – have bought coins over the past 30 and 90 days; Those other groups have been selling.
What do Bitcoin whales know?
Of course, one can only guess what Bitcoin whales know that others don’t. The fact is that the price of Bitcoin was trending higher after the release of the consumer index (inflation) data until the fake news of the sale of Bitcoin by the US government was published.
However, yesterday’s inflation announcement could have wider implications than what is apparent at first glance. For some time now, the market has been betting on an early turnaround of the US central bank’s monetary policy. The market now expects the interest rate to decrease by at least 0.25 points by the end of the year and reach 4.25 to 4.5 percent.
While the US banking crisis reinforces that expectation, the whales don’t seem to care about the Fed’s bluff – to continue raising interest rates until the end of the year. As Tony Spilotro, editor and technical analyst of NewsBTC recently pointed out, the decision of the Federal Reserve is based on retrospective indicators. He wrote:
The consumer price index is a retrospective indicator. In contrast, the stock market is an example of a forward-looking indicator.
Charlie Bilello, chief market strategist at Creative Planning, emphasized on Twitter that the consumer price index in the United States decreased from 9.1% in June last year to 4.9% in April. According to this famous analyst, the reason for this decrease is the lower inflation rate in fuel oil, gasoline, used cars, gas supply, medical care, clothing, new cars, household food and electricity sectors.
Inflation rates in the transport, food out and housing sectors have increased since last June, but declines in other core components have offset these gains. The fact that the US core inflation index (excluding food and energy) remained at 5.5% year-over-year is primarily due to housing sector inflation, an increase of 8.1% compared to last year. According to Billo:
While real rent inflation has been declining for some time now, why is the housing consumer price index rising? The housing consumer price index is a retrospective index that shows the real inflation of the housing sector in 2021 and the first half of 2022.
Billo added that after an upward trend, the housing consumer price index showed its first decline from 8.2 percent in March (March) – its highest level since 1982 – to 8.1 percent in April (Frudin). If housing inflation eventually reaches its peak, it will have a great impact on overall inflation; Because housing makes up more than a third of this index.
Is inflation falling fast?
Thomas Lee, director of research at Fundastrates, believes that inflation is falling faster than people think, making it easier for investors to stop raising interest rates by the Federal Reserve because it will cause less damage.
According to Lee, this is one of the important implications of yesterday’s CPI report for April. Carl Quintanilla notes:
The inflation of 40% of the consumer price index portfolio is decreasing, which can be a big improvement. Housing and food inflation is not slowing down, even though the current report suggests so; Because in this case, inflation would be reduced by another 50% of this basket.
As Lee predicted, a rapid decline in inflation could lead to Bitcoin’s growth. However, while retail investors are selling their bitcoins due to fears of an impending economic record with high inflation, the whales are taking this opportunity to withdraw.