Bitcoin Drops Below $50K; Sticky US inflation Weighs
By Laxmikant Khanvilkar
Virtual digital assets (VDA) recent price rise has been hit by higher than expected U.S. inflation that has dimmed rate cut prospect and dented the investment appeal of risky assets.
Bitcoin (BTC), the largest cryptocurrency by market capitalisation, retreated below $50,000 level, succumbing to selling pressure. It dropped below $49,000 momentarily. The largest crypto by market capitalization pared some of its losses before recovering to $49,516 down 1.3% over the last 24-hours.
Ethereum (ETH), the second largest cryptocurrency, also suffered losses but managed to hold on to $2,600 mark. Most recently it traded at $2,632 losing 1.4%.
Drop in crypto prices are led by the January Consumer Price Index (CPI) report showed 3.1% year-on-year inflation, faster than analysts’ 2.9% forecast. Market participants now see only a 34% chance of the Federal Reserve cutting interest rates in May, down from 52% a day ago, according to the CME FedWatch Tool.
The broader crypto markets, too witnessed a selling pressure. Solana’s native token (SOL) outperformed the market by gaining over 1% during the same time.
The global crypto market cap decreased 1% to $1.86 trillion in the last 24 hours. On the other hand, the total crypto market volume rose 8% to $77.5 billion. Total volume in DeFi is currently $5.8 billion, and all stablecoins are $70.7 billion, representing 7.5% and 91.1%, respectively, of the total crypto market 24-hour volume. Bitcoin’s dominance is currently 52.5%, up 0.15% over the day.
The IC15 index, the barometer of the top fifteen tokens, eased 1.4% to 62,575.
Meanwhile, U.S.-listed cryptocurrency-focused stocks have fared miserably. Shares of Coinbase (COIN) and MicroStrategy were down roughly 3% from Monday’s closing price, while large BTC miners Marathon (MARA) and Riot Platforms (RIOT) 5% and 2%, respectively.
The lower chance of imminent rate cuts weighed on traditional markets as well. The 10-year U.S. Treasury bond yield advanced 12 basis points, while the S&P 500 equity gauge and the tech-heavy Nasdaq Composite Index declined as much as 2%.
Analysts have noted that the “nasty” inflation reading came at an unfortunate time for bitcoin and “rug-pulled” its rally just when it broke above the $50,000 level on Monday for the first time since December 2021.
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