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Bitcoin Dips Below $27K, Reversing Post-CPI Rally
The BTC/USD trading pair on Coinbase was trading as low as $26,800 before regaining some ground.
By Jocelyn Yang
Updated May 10, 2023, 6:43 p.m. Published May 10, 2023, 6:13 p.m.
Bitcoin (BTC) dipped below $27,000 Wednesday midday, reversing a morning jump following the release of mildly encouraging U.S. inflation data.
The BTC/USD trading pair on Coinbase traded as low as $26,800 before regaining some ground, according to TradingView data. The largest cryptocurrency by market capitalization was recently trading at around $27,400, down more than 4% in the past hour and 1.8% in the past 24 hours.
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Coinglass data showed that traders who bet on a price shift liquidated over $47 million in BTC long positions over roughly the past hour versus just over $5 million in BTC short position liquidations. These types of long squeezes tend to push prices lower.
Riyad Carey, research analyst at crypto data firm Kaiko, pointed out that there are still concerns about low liquidity in markets, with BTC's aggregated 2% market depth – a metric for assessing liquidity conditions – hasn't recovered since crypto exchange FTX's collapse last November.
It's "a symptom of illiquidity," he told CoinDesk.
BTC’s price initially jumped after Wednesday morning’s Consumer Price Index (CPI) report, released by the Bureau of Labor Statistics, showed that annual inflation slowed to 4.9% in April from 5% in March and less than the forecast 5%. The CPI rose 0.4% on a monthly basis, aligning with expectations and higher than 0.1% in March.
Ether (ETH), the second-largest cryptocurrency by market capitalization, followed a similar pattern, dropping by 1% in the past 24 hours to change hands at around $1,860. The CoinDesk Market Index (CMI), which measures the overall crypto market performance, was down 1% over the past 24 hours.
Equities were mixed on Wednesday midday (ET), with the S&P 500 trading down 0.1% but the tech-heavy Nasdaq edging 0.5% higher. The Dow Jones Industrial Average (DJIA) was down 0.6% for the day.
“The sell-off coincided with a drop in stocks so it could be partially correlation-led,” Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, told CoinDesk.
UPDATE (May 10, 2023, 18:37 UTC): Adds Carey comments.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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