Market anxiety sees crypto and equities slump ahead of CPI figures
Uncertainty sent risky assets tumbling Wednesday morning as investors held off on trading, waiting on the news of the US consumer price index (CPI), which came later that day.
Bitcoin's (BTC) recent rally past $24K has subsided, with the original cryptocurrency trading just above $23K on Wednesday, down more than 3% in the 24 hours prior.
Bitcoin's market cap share has hit a new six-month low, giving ground to the second-largest cryptocurrency by market cap, Ethereum (ETH), which had enjoyed a two-month high price point on Monday. However, Ethereum's price also plunged mid-week, dropping below $1,700, down almost 4% from Tuesday.
Altcoins across the board followed the trend of the two biggest cryptos, with a general market slump across digital assets from Tuesday to Wednesday. Stellar (XLM) was down almost 7%, and Solana (SOL) dropped around 6%. Filecoin (FIL) tumbled by over 11%.
The crypto market pullback could be seen as a lower support test after last week's support-resistance flip. In the long-term view, the top cryptocurrencies are still trading comfortably within their multi-week ranges.
Digital assets generally followed equity markets, although key tech-focused indices such as the Nasdaq and the S&P 500 dropped by only modest amounts. Investors appear to be adopting a risk-averse strategy, as shown by gold, the customary safe-haven asset, which has risen consistently since the beginning of the week.
US CPI for July 2022 came in at 8.5%. This was lower than June's 9.1% and shows that inflation is slowing. But will it be enough to prevent further interest rate hikes from the Fed? Earlier this week, Tesla CEO Elon Musk posited that the US had hit peak inflation, and any recession would be "mild to moderate". We will keep watching.
StormGain Analytics Team
(crypto trading, exchange and storage platform)