The release of inflation data was a pleasant surprise for the market, as the data appeared to be more positive than the market's consensus. Bitcoin, Ethereum and the crypto market in general reacted with strong growth.
Bitcoin spikes to $24,000
With the release of the data, BTC saw an almost immediate 2% price increase in its daily high, showing that the market was not expecting positivity around the CPI data. The drop in inflation numbers shows that measures taken by financial regulators were effective, and markets should slowly enter recovery mode.
Despite the positivity around inflation, it is too early to consider it a relief as we are yet to see another rate hike by the Fed and then a soft lending that should put us back into a bullish market.
Since the beginning of the hike cycle, Bitcoin lost more than 50% of its value as the majority of investors and traders who were willing to take risks and expose themselves to digital assets left the industry and moved their funds into safer options.
[DB] CPI Data— db (@tier10k) August 10, 2022
MoM: 0.0% - Est. 0.2%
MoM Core: 0.3% - Est. 0.5%
YoY: 8.5% - Est. 8.7%
YoY Core: 5.9% - Est. 6.1%
In addition to the negative macro environment, the cryptocurrency industry saw a number of negative events that raised some questions about the safety of decentralized stablecoins, cross-chain bridges and even NFTs.
Are altcoins following Bitcoin's price performance?
With Bitcoin crossing the $24,000 threshold, Cardano, Ethereum and other altcoins are following the cryptocurrency and entering the recovery rally. The second biggest cryptocurrency on the market, expectedly, showed better performance than Bitcoin and crossed the $1,800 price level, which it could not break for the last few days.
Cardano was also aiming at the price increase as the asset gained a foothold above the 50-day moving average level. Unfortunately, the fading trading volume shows that the asset will not be able to enter an accelerated rally and will remain in the consolidation zone for a few more weeks.
The biggest gainer on the market today is Lido Finance with a 15% price increase. The main reason behind the rapid price increase is most likely tied to the upcoming Merge update.