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Santiment : Inflation News Causes Hike in Bitcoin and Altcoin Shorts

Thu, 10/13/2022 - 22:00
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Wahid Pessarlay
Enthusiastic crypto short traders get liquidated as BTC and altcoins buck expectations and rally despite bearish CPI announcement
Santiment : Inflation News Causes Hike in Bitcoin and Altcoin Shorts
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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.  

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.

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About the author

Wahid is an experienced writer, interested in everything decentralized since 2019.

Before joining U.Today, he wrote for some of the top DeFi and CeFi outlets, bringing in millions of views and educating readers with his knowledge of the industry.