It doesn't add up
None of this clears up the confusion, of course.
Why would the markets react negatively to a historic inflation figure one month only to use it as a rallying cry the next?
A big part of it is likely price. When the last CPI figure was released on Dec. 10, bitcoin's price was in tight consolidation around the 200-day moving average.
This time, the price is much lower, and it is coming off both a fresh low and a recent bounce off the psychological support level of $40,000.
So a revision back to the averages is a natural market phenomenon that can often play a much larger role in price discovery than what's happening on the fundamental level.
Of course, this explanation only works in retrospect. If the markets had experienced a negative reaction to the news, our analysis certainly would've looked a lot different today.
This is a core issue with hindsight analysis that is certainly not native to crypto, where explanations of short-term market movements are often only provided after prices have changed, therefore making them not very useful at all.
It sometimes amazes me how some long-term investors get caught up in short-term analysis.
Call it a form of cognitive dissonance, or perhaps survival instinct, especially where one's livelihood is contingent on their ability to explain the inexplicable every single day. Well, not anymore!! | 