A Flush, a Bounce, and Now the Print

That is the market we are in right now. Fast, noisy and unforgiving to anyone carrying too much leverage. Tonight, US inflation data lands at 11:30pm AEDT, and it has every chance of doing it all again.

What Happened Yesterday

During Asian trading hours, Bitcoin slid to around $81,000. Weakness in tech spilled over, with Korean chip stocks selling off on AI concerns and Nasdaq futures dipping alongside them.

The move was then amplified by leverage. Liquidations hit $672 million over 24 hours, and $586 million of that came from long positions. Traders who were betting on higher prices with borrowed money were forced out, and their selling fed the drop.

Then the market turned. Bitcoin climbed back to around $84,000 the same day.

The detail that matters is who did the buying. The rebound was led by spot buyers, people buying actual Bitcoin, not by traders rebuilding leveraged bets. A leverage flush that gets absorbed by real demand is a healthier reset than one where the same leverage piles straight back in.

Sentiment cooled too. The Fear & Greed Index dropped from 69 to 57. The market heads into tonight less crowded than it was on Monday.

Tonight’s Test

The US September CPI report is expected to show inflation rising to 3.7%, up from 3.4% in August. Energy is doing most of the damage, with oil above $100 for much of the past month.

This print matters more than usual. The Fed has already raised rates once this cycle, and most officials expect at least one more hike before year end. The next decision is on 28 October, and tonight’s number feeds directly into it.

Historically, Bitcoin moves more on CPI days than on ordinary days, though not dramatically more. The real question is what the number does to expectations for the Fed.

A hot print, particularly in core inflation, strengthens the case for another hike and could see yesterday’s lows tested again. An in-line print driven mainly by energy gives the Fed room to look through it, and could let yesterday’s recovery hold.

Either way, expect movement.

Volatility Is Not the Enemy

Days like yesterday can be uncomfortable. They are also where opportunity sits.

For active participants, sharp moves create better entry levels. Yesterday’s dip to $81,000 lasted hours, not weeks. Those who were prepared and had a plan were able to act on it. Those who were overleveraged were forced out at the worst possible moment.

The flip side is just as important. Bitcoin spends most of its life consolidating. Long stretches of sideways price action where nothing seems to happen and attention drifts elsewhere.

Those quiet periods are exactly where people get caught out. Consolidations end suddenly, and the biggest moves tend to arrive with little warning. By the time the headlines catch up, much of the move has already happened.

As we have covered previously, missing just the 10 best days in a year can be the difference between a red year and strong returns. Those days are almost impossible to predict, and they often arrive right after the scariest ones.

Sitting on your hands through the boring periods carries its own risk. It is just less visible than the risk of a bad day.

If you would like to talk through how you approach volatile periods, your Stormrake broker is always available.

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Stormrake Spotlight: Lighter (LIT) ($3.34)

Source: https://www.tradingview.com/x/axvugMAH/

The last 24 hours brought further volatility for LIT, with a bearish close below major support and a fresh lower low.

The danger for LIT is what happens if Bitcoin comes down. A move lower in Bitcoin would compound the damage already done, and as a more volatile altcoin, LIT would likely retrace faster.

If this support zone isn’t reclaimed and the breakdown holds, we can anticipate further downside.

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BTC/USD Key Levels and Price Action:

Source: https://www.tradingview.com/x/GZpYoqxl/

As mentioned above, Bitcoin fell sharply through key support at $83,000 down to $81,000, then recovered just as sharply back above it.

The bears are mounting pressure with repeated attempts at a sustained breakdown. So far, spot buying has remained strong enough to keep bringing price back above the key level.

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*All prices are denominated in USD unless stated otherwise*

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Written by Alexandar Artis