Key Points:
- Cryptocurrency markets see resurgence after CPI release.
- Bitcoin reclaims $26,000 support level.
- U.S. annual inflation rate accelerates, impacting market sentiment.
During the morning hours in Asia, Bitcoin witnessed an upward surge, crossing the $26,000 threshold. Ether, too, showed resilience by regaining the $1,600 mark. Notably, all other leading cryptocurrencies, excluding stablecoins, recorded gains as well.
On Thursday morning in Asia, Bitcoin scaled above the crucial $26,000 support level, while Ether marked a resurgence beyond $1,600. In the realm of non-stablecoin cryptocurrencies, all top 10 tokens experienced positive momentum, with Solana taking the lead with a notable 24-hour surge of over 2%. This crypto rally was stimulated by the release of the U.S. Consumer Price Index (CPI) data on Wednesday, which revealed an uptick in the annual inflation rate for August. Concurrently, the core CPI, excluding food and energy prices, exhibited a deceleration. U.S. stock futures indicated upward movement after a mixed closing on Wall Street the previous day.
Bitcoin Reclaims $26,000; Altcoins Maintain Stability Despite FTX’s Bankruptcy Approval
Over the last 24 hours, Bitcoin managed to rise by 1.45%, reaching $26,251.64 as of 07:20 a.m. in Hong Kong. This marked a 1.88% increase for the week, according to CoinMarketCap data. The world’s largest cryptocurrency reasserted its position above the $26,000 support level on Wednesday afternoon and briefly reached a daily peak of over $26,370 early on Thursday.
Although Bitcoin’s momentum appeared to wane somewhat, it remained “sufficiently robust to retain most of the gains achieved after the bounce,” as noted by Keith Alan, co-founder of monitoring resource Material Indicators, in a tweet on Wednesday.
Bitcoin still faces multiple technical hurdles, including the looming “death cross” between the token’s 50-day and 200-day simple moving averages, currently situated at $27,444 and $27,670, respectively. Additionally, there is a 100-day moving average at $28,292, which represents the upper boundary of the range, as highlighted by Alan.
Ether also registered a gain of 0.95%, reaching $1,609.32, though it still showed a 1.64% decrease over the past week. The second-largest cryptocurrency achieved a 24-hour high of $1,619.11 on Tuesday night.
Bitcoin and Ether briefly dipped early on Thursday in Asia following court approval for bankrupt crypto exchange FTX to liquidate its crypto assets worth $3.4 billion. The liquidation is capped at $100 million per week, with the possibility of extension to $200 million.
FTX’s current crypto holdings comprise $1.16 billion in Solana’s SOL and $560 million in Bitcoin, as reported in a Monday court filing.
Despite the impending FTX liquidation, cryptocurrency prices remained relatively stable. All other top 10 non-stablecoin cryptocurrencies posted gains over the past 24 hours. SOL emerged as the top performer, with a 2.70% increase, reaching $18.43, although it sustained a 6.70% loss for the week.
In a Tuesday research report, Visa recognized Solana’s blockchain for its attributes like high transaction throughput and cost-effective scalability, making it an appealing choice for payments and Visa’s stablecoin settlement pilot. Visa announced a partnership with Solana on September 5 to expand its USDC stablecoin settlement pilot onto Solana’s blockchain.
The total cryptocurrency market capitalization increased by 1.07% in the past 24 hours, reaching $1.04 trillion, while trading volume dipped by 21.30% to $27.63 billion.
John Stefanidis, CEO and co-founder of blockchain infrastructure DAO Balthazar DAO, attributed the recent stability to the consistent CPI data, a common occurrence in high-risk asset classes. Stefanidis added, “Moreover, it seems the crypto market may have already priced in the potential ramifications of FTX’s approved sale of its substantial $3.4 billion crypto asset portfolio.”
U.S. Annual Inflation Rate Accelerates
At 09:30 a.m. in Hong Kong, U.S. stock futures were trading higher following a mixed closing on Wall Street, with the S&P 500 and Nasdaq Composite recording gains while the Dow Jones Industrial Average saw a marginal decline.
Most major stock indexes in Asia displayed positive momentum on Thursday morning. Hong Kong’s Hang Seng, South Korea’s Kospi, and Japan’s Nikkei 225 all recorded gains, while China’s Shanghai Composite registered a minor 0.03% dip.
The release of the U.S. CPI data on Wednesday provided mixed signals to the market. The inflation gauge indicated a 3.7% year-on-year increase for August, representing an acceleration from July’s 3.2%. The August CPI also marked a monthly increase of 0.6%, the most significant rise since June 2022.
The accelerated growth in CPI aligns with analysts’ expectations, as reported by Reuters on Thursday. Notably, gasoline prices, which surged by 10.6% in August, accounted for more than 50% of the month’s CPI growth.
In contrast, the core CPI, which excludes volatile food and energy prices, reported a 4.3% year-on-year increase for August, reflecting a deceleration from July’s 4.7% and the smallest reading since September 2021.
Conrad DeQuadros, senior economic advisor at U.S.-based investment bank Brean Capital, stated, “There is nothing here to seriously put a Fed rate hike on the table next week, but there is enough to keep the debate about the need for one more hike in 2023 alive.”
In light of the mixed CPI data, J.P. Morgan Asset Management expressed its anticipation of no further interest rate hikes by the Federal Reserve in this monetary tightening cycle.
David Kelly, Chief Global Strategist at J.P. Morgan, stated that despite rising oil prices in early September, the impact of oil price spikes on CPI is expected to be limited. He believes the annual inflation rate will fall below the Fed’s long-term goal of 2% by the fourth quarter of 2024.
The CME FedWatch Tool predicts a 97% likelihood that the central bank will maintain the current interest rate unchanged in its September 20 meeting, which currently falls within the range of 5.25% to 5.50%. The tool also indicates a 58.4% probability of another pause in November, up from 56.8% on Wednesday.
The U.S. August producer price index (PPI) is set to be released on Thursday, with analysts expecting a year-on-year increase of 1.2%, up from 0.8% in July. This data will provide additional insights into the Fed’s future monetary policies.
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