Cryptocurrencies Climb As Market Halts, Bitcoin Rises Above $17,000

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A Bitcoin logo inside a cryptocurrency kiosk in Madrid, Spain, March 17, 2022.

Angel Navarrete | Bloomberg | Getty Images

Cryptocurrencies climbed higher on Thursday as the market paused after its two-day selloff as investors digested key data on inflation and the ongoing FTX saga.

Bitcoin rose 9% to $17,967.53, while Ether rose 13% to $1,325.78, according to Coin Metrics.

Cryptocurrencies surged just as the CPI data was released, showing a weaker than expected rise. This gave investors hope that price pressures might ease and optimism in a time of extreme fear.

“It started as a relief rally after yesterday’s selloff, but turned into speculation with all the other risky assets that the Fed might slow rate hikes after a weaker CPI print. than expected,” Steve McClurg, chief investment officer at Valkyrie, told CNBC. .

Bitcoin’s correlation to stocks hit an all-time high in late September, but has been declining for about a month now, although it saw a slight increase on Wednesday, according to Coin Metrics. Stocks also rebounded after the CPI data.

“The industry is changing before our eyes, high rate environments can change in a young market,” said Callie Cox, US investment analyst at eToro. “Right now it’s hard to digest from a price point of view because crypto doesn’t have a fundamental center of gravity. But we know that society is moving towards a decentralized future, and blockchain technology has already proved to be extremely useful.”

The spike also comes as investors are still digesting details of the ongoing crisis at FTX and the potential contagion that its failure could ripple through the market. On Wednesday, bitcoin saw a loss of around 24% over two days, and later in the evening fell to a new bear market low of $15,558.10. Ether lost about 32% over the two days.

Despite the current reversal, bitcoin remains more than 70% off its all-time high, reached exactly one year ago.

Bitcoin and Ether, the two largest cryptocurrencies by market cap, led the rest of the market higher. Solana, which was hit hard by the FTX scandal, climbed 30% after losing more than 70% this week. Even FTT, the FTX token at the center of the exchange’s troubles, jumped 21%. It fell around 140% earlier this week.

Investors are still monitoring the situation at FTX, still unsure of the extent of the damage that has hit or will hit the rest of the market.

On Thursday, Sam Bankman-Fried, CEO of the struggling exchange, broke his silence on the issue and apologized to investors and the crypto industry for his failures in the liquidity crunch.

As events unfolded this week, investors hoped to see Binance save the day with a possible bailout, but its CEO announced on Wednesday evening that he had abandoned the idea.

Bankman-Fried is currently in talks to raise capital to “be used for good by customers first,” he said in his apology tweets.

“We still think there’s leverage to unwind…so not bullish in the short term. Many asset managers have funds tied up in FTX,” McClurg said. “There will likely be a wave of redemptions at this news, causing a third wave of selling pressure. Over the long term, we are bullish and believe we are close to bottom.”

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