Better-than-expected US inflation should have lifted bitcoin. what happens here

On Thursday the US announced its consumer price index inflation Figures for October US inflation slowed for the fourth month at 7.7% — the lowest level since January this year. The latest recession is even better than expected. Earlier, in June, the US Consumer Price Index posted its biggest increase in 40 years at 9.1% during the month of June.

On the same day of inflation data, Bitcoin Gained traction up to the point when the crypto even crossed the $18,000 mark.

According to Anurag Aggarwal, principal of investment strategy at Key, in the past, when inflation was very high, crypto led to higher CPI from one month to the next. Market to crash.

Bitcoin underperformed when inflation rose to a 40-year high of 9.1% in June, according to data from Keys — higher than expected. It was the same in July—when inflation hit 8.5%, slower than expected—Bitcoin grew. A similar pattern was observed in bitcoin when inflation was lower than expected in October. Data shows inflation was expected to be around 8% in October, while it came in at around 7.7% — a 30 basis points better recession than the Street’s estimates.

Key experts point out that in the recent past, whenever the real rate has been below or equal to expectations and vice versa, markets across the board have shown an uptrend. While Equity (S&P), Energy (SPN), and BTC showed a good correlation, Gold consistently showed deviation from the group trend.

He added, “The CPI report for the last two months was higher than expected. This led to a selloff in BTC, which led to a 10% drop in BTC on the day of the September report, along with the S&P 500 and Nasdaq, as the market traded at the FOMC The report has been prepared.”

Adding to this, Agarwal highlighted that bitcoin hit a low of $18,300 in October, but after the CPI came out, it gained around 4%. Since the CPI was higher than expected, it was strange. “This reflects the relative disinhibition and moderately bullish trend of the crypto industry as BTC is now performing differently on major events than it was last year,” he added.

On CoinMarketCap on Friday, bitcoin fell to a low of $16,543.48 in 24 hours. It is currently trading below $16,800 and around 5% lower. Ether also slipped 4% and is below $1,260. Binance’s native coin BNB is down over 6.5% and is struggling near $285. Counterparts such as XRP are down over 3%, Cardano is down around 6% and Dogecoin is down around 7% in 24 hours.

Due to the current sharp selloff, Bitcoin is down about 19% on a weekly basis, Ether is down over 22%, and BNB is down around 19%.

On CoinMarketCap, the global crypto market is trading at $850.33 billion, down about 5%.

The reason behind the frenzy in the crypto markets is the crypto exchange FTX which has declared bankruptcy.

Anurag said, “With the US mid-term elections turning positive for broader markets excluding crypto, markets across the board were relieved on the evening of November 10 with the CPI number coming in at 7.7% under the expected 8.0%. While BTC, ETH And while the gains in crypto seem bigger than in equities, it’s just a very short term thing. The actual outcome of FTX going bankrupt has yet to be calculated.”

FTX issued a statement on its Twitter handler. It said FTX Trading, West Realm Shires Services (FTX US), Alameda Research, and approximately 130 additional affiliated companies (together with the FTX Group) have initiated voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware. To initiate a systematic process to review and monetize assets for the benefit of all global stakeholders.”

Not only this, Sam Bankman-Fried has resigned as CEO of FTX Group. John Ray III has been appointed CEO in his place.

In addition, in the statement, FTX said that “a number of FTX Group employees in various countries are expected to continue with FTX Group and assist Ray and independent professionals in operations during Chapter II proceedings.”

The subsidiaries of the FTX Group that are not included in the Chapter 11 proceedings are Ledger LLC, FTX Digital Markets, FTX Australia and FTX Express Pay.

It feels like deja vu. This is not the first time the crypto markets are seeing a situation like FTX. Like FTX, major crypto exchanges Celsius and Voyager Digital are under an insolvency process.

FTX’s sister token FTT is down almost 50% to its worst level in a single day — enough to remind the flash-crash of tera sister token USD and LUNA that happened in May this year.

The FTX crisis is likely to impact investor confidence in cryptocurrencies. Billions of dollars worth of assets have come under pressure in this market.

Currently, the FTX-backed token FTT is trading around $2.7 – a drop of over 23.5%. Millions of dollars of FTT’s market cap has been wiped out and currently stands at close to $363.58 million. Its weekly drop on CoinMarketCap is over 89%, while its monthly drop is over 88%.

In Agarwal’s view, being one of the most widely associated firms in the trading ecosystem, private crypto equities, sports arenas and whatnot, the fall of FTX in the coming months will certainly create havoc for the crypto markets.

“Even though the final phase is extremely potential for the broader markets, structural changes in the crypto ecosystem and much stricter regulations are to be expected after this episode,” he said.

Founded in 2019, FTX is headquartered in the Bahamas. As of February 2022, the exchange had over 1 million users.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.