Why Is Crypto Up Today? Impact Of The U.S. Consumer Price Index (CPI)

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✍️ 14 October, 2022 - 9:26 👤 Editor: Jakub Motyka

The global crypto market cap added 2.8% in the past day to $940 billion. Major tokens are currently on an uptrend. Bitcoin is up 3.6% at $19.8k, while ether has gained 3% at $1,326. Among the altcoins, Uniswap is leading the recovery at 11% as at the time of writing

The volatility relates to Thursday’s Consumer Price Index report. From the CPI data, investors are speculating at a 0.75% interest rate hike in November and December. In general, September recorded an 8.2% YoY inflation rate compared to 8.3% for August. 

Short Positions Liquidated Following The Unexpected Price Surge 

Prior to the inflation numbers, Bitcoin price had dipped to as low as $18,300. The downward pressure pushed BTC trades to a three-week high short versus long ratio. As a result, investors placed short trades in large amounts, causing the liquidations

On-chain data shows that speculators shorted bitcoin as well as altcoins. According to Coinglass, more than 136,000 investors lost over $300 million

Similarly, the data indicates that futures contract liquidations jumped as well. Specifically, about 88.76% of futures liquidations in the current bull market relates to short traders.

Many feared that a rising inflation could prompt interest rate hikes, possibly driving the economy into recession and a crypto winter. However, the prices did not take long before it recovered. 

Volatility Equally Shakes Crypto-Related Stocks

Following the latest U.S. CPI statistics report, crypto stocks were also dealt a blow. Coinbase shares, Marathon Digital, Microstrategy, and Block all dropped before the figures came out.

Consequently, major indices, Nasdaq Composite and S&P 500, fell. The trend happened when BTC surged above $19,000

Senior analyst at Finder, Frank Corva, recently remarked that inflation would affect the price of digital assets even more. The analyst forecasts a reduction in the amount people use to speculate riskier assets like crypto.

He added that the situation could worsen amid a decline in the purchasing power of major global currencies. The trajectory of the price of the digital assets remains to be seen how it will fair from here. 

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Jared Kirui
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