Bitcoin Price Plunge: Why BTC Crashed Before Critical US Inflation Data

Bitcoin tanks as traders brace for inflation shockwave.

The Pre-Data Panic

Traders dumped Bitcoin positions ahead of today's inflation report—classic risk-off behavior gripping crypto markets. The sell-off reflects Wall Street's inflation anxiety spilling into digital assets.

Market Mechanics Unpacked

Leveraged positions unwound rapidly as volatility indicators flashed warning signals. Bitcoin's correlation with traditional risk assets strengthens during macroeconomic uncertainty—proving crypto hasn't quite decoupled from legacy finance.

The Institutional Dilemma

Major players rotated into cash equivalents, demonstrating crypto's continued sensitivity to Federal Reserve policy expectations. Another reminder that when traditional finance sneezes, digital assets still catch a cold.

Today's price action reveals crypto's uncomfortable truth: for all the decentralization talk, markets still kneel before inflation data like everyone else. Some revolution.

Bitcoin price under pressure amid strong ETF outflows and liquidations

Following the significant $1.7 billion liquidation on Monday, one of the largest of 2025, there has been increased profit-taking among investors who are trying to cut down exposure to Bitcoin. This is further driven by the broader market cooldown, which is making investors more cautious.

Adding to the negative sentiment is a rise in ETF outflows. The U.S.-listed funds tracking BTC posted $466 million in outflows in recent days, outweighing the smaller inflows recorded earlier in the week.

Also, investors are positioning ahead of Friday’s $22.6 billion Bitcoin future options expiry. Historically, Bitcoin tends to experience selling pressure ahead of large expirations, as Leveraged positions are unwound and traders hedge risk. A relief rally could follow once the expiry passes and broader uncertainty clears.

Technical indicators show weak momentum

On the technical side, Bitcoin price is now significantly below its September 19 peak near $117,000, forming a descending pattern of lower highs and lower lows, a classic bearish structure. The RSI has dropped to 42.30, signaling waning buying interest, while the MACD has flipped bearish with a growing negative histogram.

Volume remains muted, highlighting indecision from both bulls and bears. If bitcoin fails to hold above the $110,000 support, a further drop toward $108,000 is likely. However, a recovery above $113,500 could help spark a price rebound.