Bitcoin recovered to $87,918 on Wednesday, Dec. 17, after defending the $85,000 support level, though traders remain cautious ahead of Thursday's U.S. inflation report. The cryptocurrency traded at $87,305 as of Wednesday afternoon, holding modest gains from its Dec. 16 intraday low of $85,427.
What Happened: Price Recovery
Bitcoin's rebound coincided with the release of November employment data showing nonfarm payrolls increased by 64,000, exceeding economists' estimates of 45,000.
The unemployment rate climbed to 4.6%, marking the highest level since September 2021.
The price movement triggered approximately $38 million in liquidations of short positions over 24 hours, compared to $23.5 million in long position liquidations. Short traders were caught off guard by the sudden upward move.
Also Read: Bitcoin-To-Gold Ratio Reaches Multi-Year Low With Technical Signals Pointing To Recovery
Why It Matters: Market Pressures
Investors await Thursday's Consumer Price Index report, scheduled for release at 8:30 a.m. ET on Dec. 18. Economists forecast headline CPI will reach 3.0% to 3.1% year-over-year, with core CPI expected between 2.9% and 3.1%.
A higher-than-expected inflation reading could prompt the Federal Reserve to pause rate cuts in January.
The Bank of Japan interest rate decision Friday presents additional risk, with Polymarket data showing a 98% probability of a 25 basis point increase to 0.25%.
"The unexpected strength in the November jobs report presents a short-term headwind for Bitcoin," David Hernandez, crypto investment specialist at 21Shares, said. "While heightened volatility is expected, the long-term narrative for Bitcoin remains intact."
Read Next: Analyst Notes Current Bitcoin Metrics Mirror 2018 Pre-Decline Conditions