Bitcoin and Ethereum have both experienced wild price swings this week. After climbing higher in response to upbeat CPI data, both cryptocurrencies saw their gains wiped away overnight.
Both Bitcoin and Ethereum have suddenly relinquished all of their recent gains made in response to the upbeat CPI report released this week.
According to CoinGecko, Bitcoin’s price has declined over 4% over the previous twenty-four hours and is currently trading at slightly around $17,000. Bitcoin is the cryptocurrency with the greatest market capitalization. The bears have reclaimed control of Bitcoin on a weekly basis as well, with the cryptocurrency experiencing a decline of 1.2% over the course of the past seven days.
According to CoinGecko’s data, Ethereum’s value has decreased by around 6% over the course of the last day. Currently trading at just over $1,200, it is still approximately $200 away from sliding into the three-digit zone.
There was a loss of more than $117 million in leveraged positions throughout the whole market, the majority of which were held in Bitcoin and Ethereum. The market as a whole had a blowout.
In the previous twenty-four hours, liquidations of ETH totaled more than $45 million, while those of BTC were almost $33 million. According to statistics obtained from Coinglass regarding cryptocurrency liquidations, the next greatest liquidations were for Dogecoin ($3.3 million) and Litecoin ($3 million), respectively.
Over the course of the previous twelve hours, more than 92 percent of all liquidations were blown out long positions.
The most recent massacre took place not long after a report on the consumer price index (CPI) was released on Tuesday, which indicated that the high inflation rate in the United States may be levelling off.
The United States Bureau of Labor Statistics said on Tuesday that their measures showed inflation was, in fact, still rising, but the rate at which it was rising was slower than the pace at which it had risen in the previous month. This would imply that the Federal Reserve’s efforts to rein in inflation have been successful, which would be consistent with the hawkish stance that the Fed has taken.
The rate of change in the prices of a basket of commodities, such as milk, used automobiles, and medical services, is what the Consumer Price Index (CPI) measures. The rate increased by 0.1% in November, which is a slower pace of increase compared to how quickly these costs were rising in October. The Consumer Price Index survey stated at that time that there had been a 0.3% price increase.
The financial markets were quick to react, with equities and cryptocurrency prices both increasing on the back of optimism that the Federal Reserve may decrease the pace of its ongoing rate increases.
However, because year-over-year inflation is still a whopping 7.1%, the Fed’s work is not yet done. A day after the report was made public, the central bank gave an indication that it will continue to raise interest rates, but instead of the 0.75 percentage point increase that was anticipated, it scaled this amount back to 0.5 percentage point increase.
When interest rates go up, it costs more to borrow money, which can have repercussions throughout the economy at a time when the Federal Reserve is attempting to rein on spending. The rise in interest rates offered by commercial banks also makes investors more interested in keeping cash on hand since it offers returns that are lower risk than those offered by the stock market.
As a result of this, both stocks and cryptocurrency prices went to new lows. And until inflation is pushed back down to levels that are below 2%, as requested by the Fed, the ongoing bear market in cryptocurrencies has very little sign of climbing to new highs.
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