Cryptocurrency prices rebounded Thursday after sliding to new October lows. This happened following the release of a key U.S. inflation reading that came in hotter than expected. The price of bitcoin was last 0.3% higher at $19,212.64 and ether lost 1.5% to $1,279.83, according to Coin Metrics. Earlier in the day they fell as low as $18,492.33 and $1,220.80, respectively.
Bitcoin dropped below $19,000 early on Thursday as investors anxiously awaited the latest read on the consumer price index. It fell more sharply after the report came in, showing a slightly larger-than-expected increase in inflation.
All of which happened despite the aggressive rate hikes the Federal Reserve has brought into play to combat rising prices.
Cryptocurrencies have been trading mostly sideways since the end of August, with bitcoin hovering within $19,000. That’s been a key level to watch for analysts. Especially those who say a break below it could lead to new lows below those hit in June.
“Crypto markets are still overwhelmingly driven by macro. Bitcoin continues to trade within a tight range since June,” said Michael Rinko, venture associate at AscendEx. “However, today’s CPI print may threaten to break this range to the downside.”
By noon crypto recovered with the stock market. Still, Steve McClurg, chief investment officer at Valkyrie investments made a pessimistic statement. He said the market’s initial reaction was to be expected with high inflation. This will suggest to investors that the Fed will continue with its planned rate hikes.
“Given what we know about Powell’s stated goal right now, it’s quite obvious. And the fact that we are in what appears to be a deep recession, it makes sense that we’d be down today,” he said. “We firmly believe that markets still have not yet reached a bottom. Furthermore, we believe that there’s still likely another 10% to 15%leg down for digital assets, and even more for equities.” He added.
The CPI, Bitcoin, And The Gruesome Crypto Industry
Furthermore, elsewhere in the market, bond yields moved higher following the inflation report. One which initially put pressure on crypto equities. Rising rates make future profits, like those promised by growth companies, less attractive.
As investors prepare for the latest Consumer Price Index (CPI) report, the price of Bitcoin plunged.
The leading cryptocurrency is trading around $18,718 by press time, or down 2.7% in the past 24 hours, per CoinGecko.
Bitcoin last traded at these levels on September 22. After that they started seeing an upwards move that took it above $20,400 last week.
Today’s bearish price action also puts the industry’s largest cryptocurrency down 16.5% in the last 30 days. However, as much as 66% from its historical all-time highs of almost $69,000 recorded in November 2021.
However, despite the drop, Bitcoin is still the least affected cryptocurrency among the rest of the major coins today.
Ethereum, the second-largest cryptocurrency by market capitalization, has posted losses of 4.6% over the past 24 hours, trading at $1,240.
Cardano (ADA) fell 9.5% over the span, followed by Solana (SOL) and XRP, which are down 7.8% and 7.2%, respectively.
The U.S. consumer price index will be released Thursday at 8:30 a.m. ET. As a result, while analysts expect it’ll show some progress in the Fed’s fight against inflation, it’s unlikely to be enough to stop the central bank from another interest rate increase next month.