Crypto Market Faces Downturn Amid Anticipation of U.S. CPI Data Release and Increased Liquidations
Summary:
Facing a drop of 3.7%, the cryptocurrency market capitulation has decreased to $2.59 trillion. This comes amid liquidations in the crypto derivatives market amounting to $250 million. Leading the decline are leading cryptocurrencies Bitcoin and Ether. This downturn coincides with the anticipated release of the U.S. Consumer Price Index, lining up with other macroeconomic events that traders keep a close eye on. The market's response to these activities could significantly influence the Federal Reserve’s decision on interest rates in June. An increase in liquidations in the major cryptocurrencies has also been observed, while net capital flows into all Bitcoin ETFs have shown a negative shift, indicating a reduction in investor risk appetite.
Today, a decrease of 3.70% has been noted in the cryptocurrency market, with total market capitalization dropping to $2.59 trillion on April 9. This coincides with liquidations in the crypto derivatives market worth $250 million. The largest cryptocurrency, Bitcoin (BTC), took the brunt of the dip, falling to approximately $68,941, which is a 4.12% decline in the past day. Ether (ETH), the second-largest cryptocurrency, didn’t escape the downturn either, dropping by 4.63% and now trading at $3,508.
The cryptocurrency market today is largely influenced by the anticipation surrounding the April 10 announcement of the U.S. Consumer Price Index (CPI). The lack of bullish momentum in crypto prices is attributed to apprehension on the expected higher CPI print. With the impending U.S. inflation data release scheduled for April 10, market analysts like Sara Min from CNBC believe it could influence risk assets, depending on the Federal Reserve's decision on interest rates.
Predictions from economists interviewed by Dow Jones suggested an estimated increase of 0.3% on a month-to-month basis and a 3.4% increase annually for the March CPI reading. Core CPI, which excludes energy and food prices, is presumed to rise by 0.3% and 3.7% correspondingly.
Prominent trader Daan Crypto Trades emphasized the significance of upcoming macroeconomic events such as CPI, the ECB interest rate decision, Jobless claims, and PPI, scheduled for April 10 and 11. He believes that hotter CPI could prompt a market correction while a cooler print may lead to a higher move, thereby enhancing the chances for a Federal Reserve rate cut in June. Current data from the CME FedWatch Tool suggests a 42.3% possibility for an unchanged Federal funds rate in June, with a 56.2% chance for a rate cut.
The decline in the prices of major cryptocurrencies spurred liquidations in the derivatives market. As per the last 24 hours reports, liquidations across the crypto market total over $242.87 million, with $152 million cleared in the past 12 hours. Without buying pressure from trading volume, these liquidations negatively affect asset prices.
The largest individual liquidation reported was for Ether/USD on OKX, coming in at $7.53 million. This led to over 83,164 traders being liquidated, with liquidations on Ether outstripping those on Bitcoin.
The introduction of spot Bitcoin ETFs and the impending Bitcoin supply halving have contributed to a unique market cycle for the cryptocurrency market. On March 27, a negative shift of $233.8 million was observed in the net capital flows into all spot Bitcoin ETFs. The converted GBTC fund from Grayscale also registered another day of outflows totaling $303 million, marking its highest in the past 10 days.
This slump in Bitcoin ETF inflows suggests a decline in investor risk appetite, leading investors to either hold cash or invest in more traditional and less volatile assets under uncertain or bearish market conditions. Despite these circumstances, market participants maintain optimism regarding upside potentials in the crypto market, especially given the forthcoming Bitcoin halving event in less than 10 days.
No investment advice or recommendations are offered in this article. All investments and trading moves carry risks, and thus readers should independently conduct research prior to making any decision.
Published At
4/10/2024 1:56:09 AM
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