Značka: CPI

Ethereum plunges 13%, down more than Bitcoin after Fed spooks crypto market

Ethereum’s native token Ether (ETH) plunged sharply hours after the U.S. Federal Reserve released the minutes of their December meeting, showing that they eye a faster timetable for hiking interest rates in 2022.The minutes showed that the Federal Open Market Committee (FOMC) is in favor of raising short-term rates “sooner or at a faster pace than participants had earlier anticipated.” According to the CME Group, trading in the interest-rate futures market showed a two-thirds possibility of the first increase in March.Ether turned lower after the minutes were released, dropping by over 13.50% to as low as $3,300. Its plunge mirrored similar downside moves across the crypto market, with Bitcoin (BTC) shedding a little over 9% to nearly $42,100.ETH/USD four-hour price chart. Source: TradingViewIncontestably, ETH/USD returned more losses to its investors than BTC/USD after the Fed’s spook. It appears traders decided to unwind tokens sitting atop better long-term profits than Bitcoin. For instance, Ether’s returns in the last 12 months — even after the Fed-led drop — came out to be around 175%. On the other hand, Bitcoin’s profits were nearly 15.75% in the same period.Performance of top fifteen cryptocurrencies. Source: MessariSimilarly, Ethereum’s top rival Solana (SOL) also logged more losses than Bitcoin, dipping by more than 13.75% after the Fed news. Nonetheless, its 12-month profits came out to be more than 7,500%, signaling further extreme corrections if the crypto market’s bias remains skewed toward the bears.ETH/BTC reaches key rebound levelEther also plunged against Bitcoin, according to the performance of a widely-traded instrument, ETH/BTC, in the past 24 hours.The pair dropped by a little over 5% to hit 0.077 BTC. In doing so, it also reached a critical support level near 0.078 BTC that has recently been instrumental in keeping Ether bullish against Bitcoin by limiting the former’s downside bias.ETH/BTC daily price chart showing its key support level. Source: TradingViewMeanwhile, the 0.078 BTC-support also appeared to be the lower trendline of Ether’s descending triangle. Descending triangles are continuation patterns that typically send the price in the direction of its previous trend after a consolidation period.That increases Ether’s potential to remain stronger than Bitcoin in the long run, as long as it breaks above the triangle’s upper trendline with convincingly higher volumes.Too soon to fear the FedFor months, Fed officials were stuck to the opinion that higher inflation in the U.S. drew its inspiration from supply-chain bottlenecks, with chairman Jerome Powell asserting that it would resolve by itself. But in the latest meeting, he showed less conviction toward the so-called “inflation-is-transitory” narrative.That is primarily because the U.S. consumer price index (CPI) reached a nearly 40-year high in November 2021, hitting 6.8% year-over-year. Meanwhile, core consumer prices, which exclude energy and food categories, rose to 4.7% from a year earlier; it came to be above the Fed’s preferred inflation target of 2%.”There’s a real risk now, I believe, that inflation may be more persistent and…the risk of higher inflation becoming entrenched has increased,” said Powell on Dec. 15 last year after concluding the FOMC meeting.U.S headline inflation over the years. Source: Bloomberg, Bureau of Labor StatisticsMadison Faller, a global strategist at JPMorgan Private Bank, told Bloomberg that investors should not fear the Fed, noting that their three planned rate cuts in 2022 would do little in curbing down consumer prices. Excerpts from her statement:“Growth and inflation will be decelerating throughout 2022, but nonetheless remain above historic trend levels. We think this will call for a much lower risk of a Fed-induced material market correction.”As Cointelegraph also covered, fears of persistently higher inflation, which, in turn, tends to devalue cash, have prompted mainstream investors to park their money in the crypto sector. For instance, Thomas Peterffy, the billionaire founder of brokerage firm Interactive Brokers Group Inc., admitted that he holds 2-3% of his net assets in crypto just in case the fiat money “goes to hell.” Likewise, Bridgewater Associates founder Ray Dalio revealed last year that his investment portfolio contains Bitcoin.The outlook against inflation promised to offer some respite to Ether, which tends to tail the Bitcoin price movements. Meanwhile, Sean Farrell and Will McEvoy, strategists at Fundstrat Global, noted that investors should increase their investments across the smart contracts sector to get the most from the next market rebound.”Given the current macro backdrop, leverage within the Bitcoin market, and recent robustness seen in the altcoin market, we think it’s appropriate to be overweight Ethereum and other smart contract platforms,” they said in a note, adding:”We probably would not bet the farm near-term on Bitcoin but think there is an opportunity in going long volatility via derivatives strategies.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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What BTC price slump? Bitcoin outperforms stocks and gold for 3rd year in a row

Bitcoin (BTC) may be down over 30% from its record high of $69,000, but it has emerged as one of the best-performing financial assets in 2021. BTC has bested the United States benchmark index the S&P 500 and gold.Arcane Research noted in its new report that Bitcoin’s year-to-date performance came out to be nearly 73%. In comparison, the S&P 500 index surged 28%, and gold dropped by 7% in the same period, which marks the third consecutive year that Bitcoin has outperformed the two.Bitcoin vs. S&P 500 vs. gold in 2021. Source: Arcane Research, TradingViewAt the core of Bitcoin’s extremely bullish performance was higher inflation. The U.S. consumer price index (CPI) logged its largest 12-month increase in four decades this November.“Most economists didn’t see the high inflation coming, as witnessed by the 1-year ahead consumer inflation expectations,” the Arcane report read, adding:“With its 73% gain in the highly inflationary 2021, Bitcoin has proven itself to be an excellent inflation hedge.”Inflation 2021: Actual CPI vs. Expected CPI. Source: BLS, New York FedBitcoin holdings grew among institutional investment vehiclesLoose monetary policies and a sustained fear of higher inflation also prompted mainstream financial houses to launch crypto-enabled investment vehicles for their rich clients in 2021.Arcane reported an inflow of 140,000 BTC (~$6.56 billion) across spot- and future-based Bitcoin exchange-traded funds (ETF) and physically backed exchange-traded products this year.Bitcoin exchange-traded fund holdings. Source: ByteTree, Arcane ResearchThat prompted more Bitcoin units to get absorbed into investment vehicles, underscoring a greater institutional demand for the cryptocurrency.In contrast, gold-backed ETFs witnessed an outflow of $8.8 billion in 2021, according to the World Gold Council’s report published this December.Global gold-backed ETF flows. Source: World Gold CouncilVolatility behind superior performance?Nonetheless, Bitcoin’s relatively superior performance in 2021 has included periods of high volatility. Many analysts believe that extreme price fluctuations keep Bitcoin from becoming an ideal inflation hedge. That includes Leonard Kostovetsky, a finance professor at Boston College, who recalled in his blog post that there have been 13 days in 2021 when BTC’s price has moved over 10% in one direction. He wrote:“It seems strange to think that a person who is worried about holding dollars because they lost 7% of their value over the last year would be comfortable holding Bitcoin which could (and often does) lose that much value in a single day.”Arcane, too, recognized Bitcoin for having been more volatile than the S&P 500 in 2021, noting that the cryptocurrency “behaved like a risk-on asset” by merely amplifying the most significant stock market movements.The researcher cited VIX, a measure of the expectation of volatility based on S&P 500 index options, to exemplify the relationship between Bitcoin and stock markets. It noted that BTC’s price fell hard whenever VIX readings spiked in recent times, underscoring that institutional traders viewed Bitcoin as a risk-on asset.Bitcoin vs. VIX. Source: Arcane Research, TradingViewAs a result, Bitcoin’s potential to fall harder in the wake of a stock market correction also became higher. Arcane also noted that a bearish 2022 for the S&P 500 may end up wiping a big portion of Bitcoin’s gains.“Therefore, be aware of stock market headwinds in the next year and their possible implications for bitcoin’s short-term price trajectory,” it added.Related: Arcane Research releases its crypto predictions for 2022But Aristides Capital managing member Chris Brown went far in predicting an all-and-all Bitcoin doom in 2022. He stated that cryptocurrencies could face massive selloffs ahead as the U.S. Federal Reserve ends its $120-billion-a-month asset-purchasing program followed by three rate hikes next year.BTC/USD weekly price chart vs. Federal Reserve balance sheet. Source: TradingView “If the Fed really does hike rates enough to make money considerably less loose, or if markets believe they will, you are going to see certain areas of speculation come to a screeching halt,” Brown said, adding:“The prime example of such asset speculation is cryptocurrency; here lies $2.64 trillion of ‘wealth’ that is backed by nothing and generates no cash flows.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin jumps past $50K as US CPI data shows highest inflation in nearly 40 years

Bitcoin (BTC) surged over $1,000 in seconds on Dec. 10 as the United States Consumer Price Index (CPI) data showed inflation in November was worse than anticipated. BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewNovember CPI conforms to expectationsData from Cointelegraph Markets Pro and TradingView showed BTC/USD running to $50,132 on Bitstamp as the data became public Friday.An hour before the Wall Street open, the pair had already hit its highest level in over 24 hours.CPI had been hotly awaited by both crypto and traditional finance analysts alike, with opinions favoring at least a 6.7% year-on-year increase for November, and even over 7%. In the event, the numbers broadly conformed to conservative guesses, reaching 6.8%.CPI below expectationsBullishall markes popping— Alex Krüger (@krugermacro) December 10, 2021The results nonetheless mean that inflation on CPI is at its highest in almost 40 years.U.S. CPI data chart. Source: U.S. Bureau of Labor StatisticsStill rangeboundBitcoin’s short-term successes did not last long, with BTC/USD back under $50,000 at the time of writing.Related: Bitcoin could hit $100K, gold $2K in 2022 thanks to ‘deflationary forces’ — Bloomberg analystThe largest cryptocurrency remained trapped in a range with no visible upside bias, this requiring a break above $53,600 to change, analysts previously argued. Yes, there’s been a decent amount of volatility for #BTC recentlyIn fact, $BTC has been threatening to lose this red support throughout the week but failing to confirm a breakdownBTC has returned above red yet againStill holding here until further notice#Crypto #Bitcoin pic.twitter.com/739hdAooiI— Rekt Capital (@rektcapital) December 10, 2021

Altcoins were unmoved by the CPI event, with Ether (ETH) still down 1.3% over the past 24 hours. Out of the top 10 cryptocurrencies by market capitalization, only Terra (LUNA) managed to eke out a small gain on the day.

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Bitcoin hovers near $48K ahead of fresh key US inflation data

Bitcoin (BTC) recovered above $48,000 on Dec. 10 after another fall took BTC/USD to lows of $47,350 overnight.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewTaper tantrumsData from Cointelegraph Markets Pro and TradingView showed the pair orbiting $48,300 at the time of writing as markets braced for November’s Consumer Price Index (CPI) readout.As Cointelegraph reported, economists tip this month’s year-on-year inflation data to beat October at 6.7%.While last month’s shock CPI news fuelled an uptick across Bitcoin and crypto assets, caution among analysts prevailed ahead of Friday’s figures.“At this point I think the CPI data is moot. Markets have priced it in unless it’s to the extreme end,” popular trader Pentoshi argued on Twitter.He added that the “real” potential market mover from the macro side should be next week when the United States Federal Reserve’s Federal Open Market Committee gives indications over the central bank’s asset purchase taper policy.Increasing the rate of tapering — decreasing asset purchases — would pressure risk assets, commentators say, leading to reduced performance for Bitcoin. For Arthur Hayes, former CEO of derivatives platform BitMEX, this would only reverse once the Fed returns to “business as usual.”“For those who are deciding whether to allocate more fiat into crypto, it pays to wait. I don’t see money getting any free-er or easier. Therefore, it pays to sit on the sidelines until the dust settles after a March 2022 or June 2022 Fed rate hike,” he wrote in his latest blog post on Thursday.“Watch out for a puke fest in risk asset prices should the Fed hike, followed by a quick resumption of zero interest rate policy and aggressive bond purchases. When the Fed signals a return to business as usual, then it’s time to back up the truck.”U.S. inflation chart. Source: Trading Economics“Bottoms take time”Such a prognosis ties in with existing medium-term forecasts for Bitcoin putting its cycle top further on in 2022 — not this month, as previously slated.“Bottoms take time. Unfortunately, they do. And we’re getting close to it with Bitcoin,” he advised Twitter followers. “After that, we’ll get another big cycle in 2022. All good.”He added that compared to 2017, the last post-halving bull run year, Bitcoin was “probably” more toward the beginning of its peak phase than the end of it.Meanwhile, separate data, which has shown Bitcoin copying price action from 2017 almost to the day, faces a key test this month.

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Inflation benchmark Frax Price Index to launch on Partisia blockchain

On Thursday, Frax Finance, a developer of algorithmic stablecoins, announced it would launch the Frax Price Index, or FPI, on the Partisia blockchain. The benchmark would have its stablecoin pegged to it and serve as a competitor to the standard Consumer Price Index, or CPI. Although the latter is a near-universally adopted inflation gauge, skeptics have claimed that its methodology does not account for items such as housing prices, college tuition, healthcare, etc. All of which have risen significantly in the past decade in the United States.Brian Gallagher, co-Founder at Partisia Blockchain, elaborated on the development:Together with Partisia Blockchain’s advanced privacy oracles, a variety of crowdsourced demographic purchasing data are converted into trustworthy indexes enabling FPI to disrupt the non-transparent methods so far used to report inflation data.In a previous interview with Cointelegraph, Sam Kazemian, co-founder of Frax, explained that the FPI stablecoin will have a staking component. As a result, there will be an interest-bearing yield on the FPI in addition to the core function of performing to the CPI standard, thus improving the value proposition of a stablecoin pegged to it. “And with, with the FPI, you can kind of think of it as essentially as a commitment to a peg in monetary policy,” said Kazemian.According to CoinGecko, Frax is currently the seventh-largest stablecoin with a market cap of $1.35 billion. Unlike fiat money stablecoins, algorithmic stablecoins balance funds held on the blockchain via smart contracts with supply and demand instead of relying on reserves.

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