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(Kitco News) – Crypto prices rallied across the board on Wednesday morning after the U.S. Consumer Price Index (CPI) recorded an 8.5% year-over-year increase. the other. While inflation remains at some of the highest levels in decades, the actual print was lower than the expected 8.7%, prompting traders to dive back into the markets.
Bitcoin responded to the CPI print by rising 5.1% from support at $23,000 to an intraday high of $24,180, where it ran into a firm wall of downside resistance that remains the last. major barrier before $28,000.
BTC/USD 4 hour chart. Source: Trading View
Traders breathed a sigh of relief after the print, which was 0.2% lower than expected, as it could potentially lead to a less aggressive interest rate hike schedule by the Federal Reserve.
The past two meetings of the Federal Open Market Committee (FOMC) have seen the central bank raise interest rates by 75 basis points on each occasion, and today’s CPI drop from month to month another provided the first evidence that the actions taken by the central bank are beginning to have an effect.
Short-term rally initiated
The positive reaction to the weaker than expected CPI print was immediate, with prices in the crypto market as well as traditional markets rising following the news.
And the gains should continue for at least the next week, according to investment strategist and Real Vision CEO Raoul Paul, who suggested that “markets now have a pretty clear run to regional Fed surveys in a week or so”.
Markets now have a pretty clear run to regional Fed surveys in about a week. I expect them to be significantly weaker. The peak of inflation gives way to the fear of the peak of growth. I think the markets will react positively to weak growth, not negatively, in general.
— Raoul Pal (@RaoulGMI) August 10, 2022
But not all analysts are ready to end the bear market, including Blockware chief analyst William Clemente, who referred to the ongoing relief rally as “short-term”.
What happens next for Bitcoin, the crypto market, and global financial markets in general largely depends on what the Fed does next. Or, as independent market analyst Michaël van de Poppe noted in the following tweet, the key metric to watch now is US yields.
For the first time in 1.5 years, the CPI data is lower.
This doesn’t show that inflation is over, just that expectations are worse and reality is better, which could potentially lead the FOMC to become more dovish -> fewer rate hikes.
Key to watch: US yields.
— Michael van de Poppe (@CryptoMichNL) August 10, 2022
Double-digit earnings for multiple altcoins
The broader altcoin market saw an even more pronounced reaction following today’s CPI print, with several coins in the top 200 seeing double-digit increases while top altcoin Ether (ETH) surged. gained almost 9%.
Daily performance of the cryptocurrency market. Source: Coin360
The biggest gainers on the day were Injective (INJ), Flux (FLUX), and Lido DAO (LDO), which saw increases of 24.79%, 23.76%, and 18.15%, respectively.
The overall cryptocurrency market capitalization now stands at $1.14 trillion, and Bitcoin’s dominance rate is 40.3%.
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