Bitcoin, Ethereum Staging Short Cover Rally Before US CPI Inflation Data

As a seasoned researcher with over two decades of experience in the dynamic world of finance and cryptocurrencies, I find myself constantly amazed by the unpredictable rollercoaster that is the crypto market. The recent rally of Bitcoin and Ethereum, just ahead of the crucial US CPI inflation data release, is yet another testament to this fact.


As a researcher, I’ve observed an upturn in the Bitcoin and broader cryptocurrency market this week. The BTC price is edging closer to $60,000, possibly influenced by the US CPI inflation data for July, set to be released on August 15. Interestingly, altcoins like Ethereum have demonstrated a more pronounced response to macroeconomic events, rallying over 4%, suggesting a robust resilience and potential for growth in this sector.

Bitcoin, Ethereum Stage Short Cover Rally

As I eagerly await the upcoming CPI inflation data, I’m observing a robust short-cover rally in the top two cryptocurrencies I hold. In the past 24 hours alone, over $177 million has been wiped out in trading, with around $91 million coming from short positions being closed and nearly $86 million from long positions getting liquidated.

Based on current predictions, it appears that the U.S. Consumer Price Index (CPI) data might indicate an increase in inflation rates, causing apprehension about whether the Federal Reserve will opt for a rate reduction in September. Market projections suggest that inflation could spike by 0.2% in July compared to the 0.1% decrease experienced in June.

Over the last few weeks, I’ve noticed that the price of Bitcoin has been fluctuating between roughly $50,000 and $60,000. Last weekend, a technical indicator known as the “Bitcoin Death Cross” emerged on the charts, suggesting a possible shift towards bearish trends. Some fellow analysts predict that Bitcoin might dip below the $50,000 mark before it’s ready to embark on another bull run.

At this moment, Ethereum’s price stands 4.70% higher at approximately $2,661, and its market cap is around $320 billion. But today’s short covering might just be a temporary rebound, or a “dead cat bounce,” since technical signals for altcoins don’t seem robust right now. Furthermore, large-scale Ethereum transfers by whales who accumulated during the ICO period could suggest a pessimistic outlook on the market.

ETH/BTC Pair Rebounds

10X Research observes that following the Merge event in September 2022, the ETH/BTC exchange has been trending within a descending trading channel and is currently experiencing a bounce before the CPI announcement. As Ethereum developers work on scaling solutions and prepare for the Pectra update, the asset remains sensitive to broader market fluctuations worldwide.

10x Research observed that major upgrades like The Merge and Dencun have had limited effect on Ethereum’s price. Instead, they found that Ethereum’s value is mainly influenced by broader economic factors such as inflation, as suggested by the following chart and similar observations during previous events.

Bitcoin, Ethereum Staging Short Cover Rally Before US CPI Inflation Data

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2024-08-13 08:54