Bitcoin falls back below $30,000 while 8.3% US CPI shows inflation has peaked

Bitcoin (BTC) dropped $1,500 in a matter of minutes on May 11, as the latest U.S. inflation data delivered mixed sentiment about the economic outlook.

Bitcoin hits 10-month low

BTC/USD dropped from $31,500 to support at $30,000 following the release of the Consumer Price Index (CPI) data, according to Cointelegraph Markets Pro and TradingView.

CPI came in at 8.3%, beating expectations by 0.2%, but still down 0.2% from the previous month's data. People have naturally turned to the idea that peak inflation may be behind us.

“This is higher than expected, but it’s the first decline in two years, we saw 8.5% inflation last month. Inflation is flattening and may have peaked,” Cointelegraph contributor Michaël van de Poppe wrote in a follow-up tweet road.

The cryptocurrency market still highlighted the potential for a new downtrend in stocks as major altcoins joined bitcoin's losses ahead of Wall Street trading. Stock index futures also fell.

That sentiment has been shaken by events surrounding U.S. dollar stablecoin TerraUSD (UST), which has shed significant positions this week after losing its peg to the U.S. dollar.

Terra's co-founder Do Kwon's pledge to rebuild and restore the peg to UST was posted on social media hours before the release of the CPI data.

"Terra's recovery will be something to look forward to," Kwon insisted at the end of his Twitter post.

However, as analyst Dylan LeClair made clear in his answer, his words didn't convince everyone.

Luna's supply will be diluted to infinity in an attempt to re-establish the peg, while shorts will be selling heavily, meaning it will be diluted at lower and lower prices

Guaranteed to return to zero

crazy

— Dylan LeClair (@DylanLeClair_) May 11, 2022

whales are shifting

At the same time, the outlook for Bitcoin is not much more optimistic than Terra.

On-chain analysis resource Whalemap warned that a large number of investors have moved funds in recent days, especially those who bought BTC at a price of $15,000 above the current spot price.

“Lots of whale activity yesterday,” the firm tweeted with a chart showing a large number of tokens being relocated from wallets.

Lots of whale activity yesterday

Even the best people are not ready to face

Many Whales Bought Bitcoin for $40K-$34K Yesterday

Note: The last bubble was an exchange moving from one cold wallet to another, so it can be ignored

— whalmap (@whale_map) May 11, 2022

As Cointelegraph reported, Bitcoin’s initial days below $30,000 saw a massive increase in exchange balances, in stark contrast to the overall buying trend. Previously, exchange reserves had been at their lowest level since 2018.