The cryptocurrency market has just recorded a remarkable hike in investors placing short trades and an equally high amount of short liquidations on the back of the latest U.S. Consumer Price Index (CPI) statistics announcement according to Santiment.
The crypto market analytics platform shares data that shows that a lot of traders shorted Bitcoin (BTC) and altcoins in anticipation of a price dip after the announcement of inflation figures that exceeded expectations.
On the back of the inflation news, BTC fell sharply to a daily local low of around $18,300. The price drop saw the BTC market hit a 3-week-high short versus long ratio. However, it did not take long for the price to begin rising, leading to the shakeout of short traders betting against the benchmark crypto.
📈 Traders shorted #Bitcoin & #altcoins heavily as #inflation news broke. When $BTC hit a 3-week high short vs. long exchange ratio at 2pm UTC, prices reversed course & began rising, & many betting against #crypto got liquidated. Prices move toward the crowd's least expectation. pic.twitter.com/dVgGU5IXwN
— Santiment (@santimentfeed) October 13, 2022
Data from the crypto derivatives market monitoring tool Coinglass confirms the observation. On the day, over 136,000 investors lost more than $300 million in futures contracts liquidations. During the last four hours period where BTC has risen to be trading at around $19,000 currently, 88.76% of futures liquidations have been from short traders.
Crypto market already priced in inflation figures?
The crypto market price action, according to Santiment, has been the "crowd's least expectation." Before now, analysts advised the market to brace itself for volatility prompted by the CPI figure announced this week, among other announcements including a likely interest rate hike from the Fed's Federal Open Market Committee (FOMC).
The price action following the CPI announcement indicates that the crypto market had already priced in the unfavorable inflation trend. It also gives some merit to speculation among market observers that the price of BTC has reached a bottom.
Vladislav Sopov
Dan Burgin