Bitcoin loses 9% after US inflation data, but does not give up $20,000

There is a considerable blow to the cryptoasset market on Wednesday, following the reading of the US inflation figure, which was much stronger than expected. Bitcoin even shed 9%, weighed down by the slump in risk appetite that took hold in the markets in anticipation of the softer August CPI reading. While headline inflation price pressures eased last month, core inflation continued to climb to 6.3%, opening the door for a 75 basis point hike from the US Federal Reserve (Fed) next week.

The 'altcoins' did not do better, with drops of 6% for Ethereum, that left lows for the day at $1,564, far from the highs, almost at $1,800, of a few days earlier. The second 'crypto' by market capitalization continues to be the great protagonist these days, as the migration to a consensus model of proof-of-stake, the event known as 'The Merge', is expected to occur on September 15 between 02:00 and 04:00 GMT.

Both tokens are trying to rebound on Wednesday, with Ether above $1,600, while Bitcoin has not lost $20,000 at any point. The technical appearance of both tokens sent opposite signals prior to Tuesday's declines. While Ether pointed to the formation of a bullish pattern, which anticipates further rises, Bitcoin faced the 200-day moving average above $23,000, as it anticipated a correction. According to historical market data, each time it has run into it, the declines have been steep for the queen of digital currencies.

One of the most widely followed indicators of market sentiment, the Bitcoin Fear and Greed Index dropped from 34/100 to 27/100. Despite the drop, the index avoided returning to the extreme fear zone, suggesting some investor resilience.

However, the entry into the sub-30 zone offers uncertainty following the US CPI report. 20/100 remains a great floor for this indicator and a drop in the Index below 20 is likely to push $18,000.

More broadly, market capitalization suffered following the pullback, but is subject to the $1 trillion mark, despite corrections of nearly 8% for the MATIC (Polygon) or 12% for Solana.