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Following the short-term panic on the cryptocurrency market yesterday caused by higher than forecast inflation numbers, we are seeing a brief recovery across various digital assets.
Market prices plunge
Prior to the CPI release, most cryptocurrencies entered a correction phase, as relatively strong assets started losing as much as 10% of their value in the last 24 hours. Numerous assets, including XRP, ADA and even Bitcoin plunged to new local lows, creating a dangerous possibility of a plunge to lower lows.
The total market capitalization has also plunged, losing more than $30 billion in less than a day – the biggest one-day loss since summer. Bitcoin shared the sentiment of traders and dropped to September's bottom at $18,380.
Biggest loser is recovering
Yesterday, Cardano was one of the biggest losers on the market that lost an important foundation beneath it. Such a tendency seemed critical for an asset that has been moving in a downtrend for more than a year now.
A further plunge would have created even more pressure on an asset that has been justifying its place as the least profitable cryptocurrency from the top 10 of the market. Unfortunately, ADA's movement on the market shows that recovery will not be a possibility in the future either.
Ethereum needed only $50 million
Two hours after the CPI release, Alameda started withdrawing funds from Circle massively. According to transaction data, $46 million have been moved from the platform and then transferred to Binance and FTX.
After the transaction was finalized, the price of ETH saw a massive 9% price rebound despite being in a heavy loss shortly before that. Some investors assumed that Alameda was able to move ETH by 9% with such a modest volume.
However, Ethereum's trading volume is enough to conclude that it was not possible to cause a 9% move with only $50 million, especially considering the liquidity on Binance and FTX. The most likely scenario is that funds injected onto the market became a start for the rebound that would hsve happened without Alameda's funds.
More altcoins in recovery
In addition to the usual representatives of the industry, we saw Atom with the most actively growing assets on the market in the last 24 hours. At press time, the asset has gained more than 6.3% to its value, aiming at a spike above the 50-day moving average.
Since the middle of September, Atom has been continuously moving down, losing more than 27% of its value despite the 182% rally before that. The strong price performance despite poor market conditions attracted a lot of investors to the ecosystem, and it will most likely help Atom if bulls are able to push it above the local resistance level and initiate a full recovery.
Vladislav Sopov