Bitcoin hits highest level in a month thanks to rosier-than-expected US CPI
The largest cryptocurrency Bitcoin is in a super rally on Wednesday, touching its highest level in a month thanks to significant cooling in US inflation data. Broadly, crypto markets are on a bull run with the focus now shifting toward the FOMC policy meeting. Bitcoin which holds dominance in the crypto market moved closer to the $18,000 mark with weekly performance further improving. Also, with a rosier than expected inflation print, Bitcoin snapped its seven days of losing streak. Other counterparts such as Ether, Binance, XRP, and Dogecoin have also witnessed an upside in the last 24 hours.
According to CoinMarketCap data, at the time of writing, the crypto market cap was around $870.29 billion up by 2.58% over the last day. Also, the market volume surged by a whopping 56.82% over the last 24 hours to $52.72 billion.
Bitcoin whose dominance is around 39.27% in the market, was trading over $17,780 at levels above 3.5% over the last 24 hours. The crypto’s market cap is around $341.5 billion. Its weekly performance improved with an upside of more than 4%. Binance is the top trending cryptocurrency on Wednesday. Bitcoin’s intraday high is currently at $17,930.09.
Shivam Thakral, CEO of BuyUcoin, India’s second longest-running crypto exchange said, “Bitcoin has touched its highest point in a month ahead of the crucial Fed meeting. Central banks in the US, Japan, EU, and UK will release their inflation numbers which will have a significant impact on the price movement of digital assets in the mid to short term. Bitcoin dominance crossed the 41% mark which indicates de-risking by a large number of investors.”
Other counterparts such as Ethereum surged by nearly 4%, while BNB and XRP jumped over 2% each, and Dogecoin was higher by 1.75% currently in the last 24 hours.
On Tuesday, US inflation eased to its lowest level in the year to 7.1% in November better than the estimates of 7.3%. This month’s inflation print is the lowest since December last year. Also, it would be the fifth consecutive monthly slowdown in inflation.
According to Arcane Research report, a lower-than-expected CPI release on Tuesday sent BTC higher towards $18,000 after seven days of contracting volatility. Apart from the CPI, markets have been rather quiet. Institutional activity has dwindled down after a brief spike, and structurally, volumes and flows remain stagnant.
Expectations are now of a dovish stance from US Federal Reserve in the December policy. The majority expects a 50 bps rate hike rather than a fourth 75 bps hike in the key funds’ rate. To tackle multi-decadal high inflation, FOMC has been tightening monetary policy by hiking key rates by 75 bps for three-consecutive policies.
In their market research report dated December 13, Bendik Schei Head of Research, and Vetle Lunde Senior Analyst at Arcane Research said, “While Bitcoin has stabilized around $17k with no material action in the last few weeks, this week could be volatile due to several important economic events.”
Arcane’s experts note added that FOMC will likely cause a sharper market reaction, and market participants are currently pricing in an 80% chance for a 50bps hike vs. a 20% chance for a 75bps hike. In addition to the nearest hike, clues provided by Jerome Powell regarding the forecasted hiking schedule for 2023 will likely contribute to causing a volatile environment. Also, the BoE and ECB will hike interest rates this week, which may have spill-over effects on bitcoin as it may directly impact dollar strength.
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