A stronger-than-expected inflation figure coincided with a sharp reversal in the cryptocurrency market.
Bitcoin, which was recently trading at $19.8K and up more than 3%, had been stuck in a tight range between $19,000 and $21,000 for the majority of the previous month due to worries about uncontrollable inflation and the looming possibility of a severe recession.
Following bitcoin’s Thursday trend, big cryptocurrencies like Ether also plunged sharply before quickly making up lost territory.
The market value of the second-largest cryptocurrency was recently trading below $1,300, or essentially unchanged from Wednesday at the same time. Aave, Uniswap, XRP, and were some of the day’s top gainers; each lately increased by more than 5%.
For the day, 127,925 traders who were primarily betting against the increase were liquidated, totaling $361 million in value
The greatest single liquidation order, worth $4 million, was placed on Bitmex.
At the time this post was written, the value of the global cryptocurrency market was $943 billion, up 3% from the previous day.
According to Labor Department data released on Thursday, U.S. consumer prices in September decreased from the previous month, but the inflation rate was still higher than expected by economists.
On Thursday afternoon Bitcoin fell by almost 3% to its lowest level since September 21. As of the time of publication, it had fully recovered all of its losses and was reclaiming the $20K milestone.
Since the Federal Reserve’s efforts to cool off skyrocketing inflation have driven down prices for financial assets viewed as risky, from equities to bitcoin, cryptocurrency traders regularly monitor monthly inflation numbers.
As the Fed and other central banks globally aggressively hike rates to combat inflation, such a narrative has dampened the bullish morale around the Crypto market.
Bitcoin, which has had a sharp decline this year, may continue to be under pressure as traders worry about the possibility of further significant interest rate increases by the Federal Reserve at the upcoming FOMC meeting on November 1-2.
In contrast to the hype-fueled euphoria of earlier years, this has driven many investors in digital assets away from the market and from day trading, especially those who had entered the market recently. The market of late has been particularly devoid of retail investors. Institutions have now taken center stage, which could partly account for the drop in volatility.
Download Nairametrics App for breaking news and market intelligence.