The cryptocurrency market, once buzzing with optimism, found itself in a state of uncertainty as investors reacted to the release of hotter-than-expected inflation data. This news dampened hopes for a further interest rate cut by the Federal Reserve, casting a shadow over the market’s bullish sentiment.
Bitcoin, the king of cryptocurrencies, stumbled during trading hours, dipping below the crucial $58,000 mark before nearly recovering all its losses overnight. Despite this short-lived dip, the world’s largest cryptocurrency remained down 1.16% over the week and 8% since the beginning of October, a month that usually sees significant gains for Bitcoin. The unexpectedly high September consumer price index data, coupled with higher-than-expected weekly jobless claims, fueled the market’s pessimism.
Traders had been pricing in an 86% chance of the Fed cutting interest rates by another 0.25% during November’s FOMC meeting, according to the CME FedWatch tool. However, the recent data suggests that the Fed might be hesitant to ease monetary policy further, leaving investors apprehensive.
Ethereum, the second-largest cryptocurrency, also experienced choppy trading, remaining largely unchanged in the last 24 hours. However, it managed to eke out modest gains of 1.14% over the past week.
The market volatility was evident in the significant liquidations observed over the past day, exceeding $194 million. Bullish bets took a hit, with more than $145 million evaporated. Bitcoin’s Open Interest, a measure of the total value of outstanding derivative contracts, dropped by 0.63% in the last 24 hours, while the number of long positions (bets on price increases) surged sharply compared to short positions (bets on price decreases).
The Cryptocurrency Fear & Greed index, which gauges market sentiment, slipped into the “Fear” category, reflecting the prevailing anxiety amongst investors. This suggests that the market might be susceptible to further downsides.
Despite the overall market downturn, some cryptocurrencies managed to defy the trend, registering notable gains. Uniswap (UNI) led the pack with a 9.67% surge, followed by Popcat (POPCAT) with a 7.96% jump, and MANTRA (OM) with a 5.53% rise.
The global cryptocurrency market capitalization stood at $2.11 trillion, reflecting a decrease of 0.46% in the last 24 hours. Meanwhile, the stock market mirrored the crypto market’s volatility, with major indices retracing on Thursday. The Dow Jones Industrial Average dropped 0.14%, the S&P 500 slipped 0.21%, and the tech-heavy Nasdaq Composite lost 0.05%.
Cryptocurrency analysts are keeping a close eye on the market developments. Analyst Rekt Capital highlighted Bitcoin’s retest of $60,600 as support for the second straight week, emphasizing the importance of a weekly close above this level to maintain the current range and potentially lead to an upward move. However, he also warned of potential downsides if the support level is breached.
Another leading analyst, Ali Martinez, pointed to the increasing leverage use on cryptocurrency exchanges. He noted that more people are borrowing to make bigger bets, which could exacerbate price swings. He cautioned investors to exercise caution in such a scenario. The volatility in the cryptocurrency market is likely to continue as investors grapple with inflation fears and uncertainty surrounding the Federal Reserve’s future policy moves.
