Bitcoin ( BTC ) dropped below $27,000 midday Wednesday, reversing an early morning rise following the release mildly encouraging U.S. Inflation data.

TradingView data shows that the BTC/USD pair traded on Coinbase as low as $25,800 before recovering some ground. The largest cryptocurrency based on market capitalization traded at $27,400 recently, down more that 4% over the last hour and 1.8% over the past 24 hours.

(TradingView)

Data from Coinglass revealed that traders betting on a price change liquidated more than $47 million worth of BTC long positions in the last hour, compared to just $5 million worth of BTC short positions. This type of long squeeze tends to drive prices down.

Riyad carey, a research analyst with crypto data firm Kaiko pointed out that low liquidity is still a concern, as BTC’s aggregated 2% of market depth – a metric used to assess liquidity conditions – hasn’t recovered after the collapse of crypto exchange FTX last November.

He told CoinDesk that it’s “a sign of illiquidity”.

(Kaiko)

BTC’s initial price jumped following Wednesday’s Consumer Price Index report released by the Bureau of Labor Statistics. The report showed that the annual inflation rate slowed from 5% to 4.9% in the month of April, down from 5% last March, and lower than the expected 5%. The CPI increased 0.4% monthly, which was in line with expectations. It was also higher than the 0.1% increase seen in March.

Ether ( , ETH), which is the second largest cryptocurrency in terms of market capitalization, also followed the same pattern. It dropped by 1% over the past 24 hour to trade at about $1,860. The CoinDesk Market Index, which measures the performance of the crypto market as a whole, has dropped 1% in the last 24 hours.

The market was mixed at midday on Wednesday (ET). While the S&P 500 traded down 0.1%, the tech-heavy Nasdaq edged up 0.5%. The Dow Jones Industrial Average was down by 0.6% on the day.

Lucas Outumuro is the head of research for blockchain analytics company IntoTheBlock. He told CoinDesk that “the sell-off coincided” with a fall in stock prices.

UPDATE (10 May 2023, 18.37 UTC) Adds Carey’s comments.

James Rubin is the editor.