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Bitcoin, Ethereum Staging Short Cover Rally Ahead of US CPI Inflation Data Release

By:W, Leah
Last updated:08/13/2024
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As the United States releases its July CPI inflation data earlier this week on August 15, Bitcoin and the broader cryptocurrency landscape have once again experienced a resurgence, with Bitcoin’s (BTC) price edging closer to the $60,000 mark. Altcoins, being more susceptible to macroeconomic events, have demonstrated even more robust rallies, including Ethereum and others, which have surged by over 4%.

Bitcoin and Ethereum Stage Short Cover Rally

Preceding the highly anticipated release of the CPI inflation figures, the two leading cryptocurrencies are displaying resilience in a significant short-covering rally. Over the past 24 hours, a total of over 177 million has been liquidated,comprising 91 million in short liquidations and nearly $86 million in long liquidations.

Reports indicate that the upcoming US CPI data might reveal a spike in inflation, heightening concerns about the Federal Reserve’s potential decision to withhold a rate cut in September. Market projections suggest that July’s inflation could surge by 0.2%, contrasting the 0.1% decline recorded last month.
In recent weeks, Bitcoin’s price has been fluctuating within the 50,000to60,000 range. Last weekend, a Bitcoin Death Cross emerged on technical charts, signaling strong bearish sentiment. Some market analysts predict that BTC may dip below $50,000 once more before embarking on its next bullish cycle.

At the time of writing, Ethereum is trading 4.70% higher at 2,661,withamarketcapitalizationof320 billion. Nevertheless, today’s short covering could merely be a fleeting rally, as technical indicators for altcoins also appear lackluster. Furthermore, significant ETH whale transactions, coupled with ICO-era accumulation, are contributing to a negative market sentiment.

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ETH/BTC Pair Rebounds 

According to 10X Research, since the Merge event in September 2022, the ETH/BTC pair has been trending downwards within a defined trading channel but is now exhibiting signs of a rebound in anticipation of the CPI data release. Despite Ethereum developers’ ongoing dedication to scaling solutions and the upcoming Pectra upgrade, the asset remains significantly influenced by macroeconomic developments in the global market.

“Previous upgrades, such as the Merge and Dencun, have had minimal impact on Ether’s price. Instead, ETH’s value continues to be primarily driven by macroeconomic factors like inflation,” noted 10x Research citing the below chart and similar observations during past events.

 

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