$117 Million Liquidated Overnight as Bitcoin and Ethereum Lose Post-CPI Gains

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Bitcoin and Ethereum just gave up all new gains earned after this week’s upbeat CPI report.

Bitcoin, the largest cryptocurrency by market capitalization, has fallen almost 4% in the past 24 hours and now sits just above $17,000, per CoinGecko. Bears have also regained control of Bitcoin on a weekly basis, with the cryptocurrency down 1.2% in the past seven days.

Ethereum, meanwhile, has fallen nearly 6% in the past day, according to CoinGecko. About $200 remains to fall into triple-digit territory, trading at just over $1,200.

Over $117 million in leveraged positions across the market have been depleted, with Bitcoin and Ethereum making up the majority of those positions.

In the last 24 hours, ETH saw over $45 million in liquidations, while BTC saw around $33 million. After that, Dogecoin ($3.3 million) and Litecoin ($3 million) were the next largest liquidations, according to liquidation data pulled from Coinglass.

Over 92% of all liquidations in the last 12 hours have been canceled out by long positions.

Liquidations in the last 12 hours. Source: Coinglass.

The latest carnage comes quickly on the heels of a Tuesday CPI report that suggested high inflation in the United States may be cooling.

Bitcoin and Ethereum backtrack after CPI report

On Tuesday, the US Bureau of Labor Statistics reported that inflation did indeed continue to rise by its measures, but the rate at which it rose was slower than the previous month. This suggests that the Federal Reserve’s hawkish attempts to cripple runaway inflation have had an effect.

The Consumer Price Index (CPI) measures the rate of change in the price of a basket of goods, including milk, used cars and medical care. The rate rose 0.1% in November, which is less than the rate at which these prices rose in October. At that time, the CPI report showed prices rising 0.3%.

Markets reacted quickly, with stocks and cryptocurrencies both rising on hopes that the Fed’s continued rate tightening would slow.

But with year-over-year inflation still above 7.1%, the Fed’s job is not done. A day after the report was released, the central bank signaled that it would continue to raise rates, but instead of the 0.75% hike, it lowered that figure to 0.5%.

As rates rise, money becomes more expensive to borrow, which can affect the wider economy as the Fed tries to slow spending. It also makes holding cash more attractive, as commercial bank interest rates also rise, providing investors with less risky returns than entering the stock market.

Thus, stocks and cryptocurrencies fell. And until inflation is brought back below 2%, in line with the wishes of the Fed, the ongoing crypto bear market shows little sign of returning to new highs.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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