$117M Liquidated Overnight As Bitcoin, Ethereum Lose Post-CPI Gains

Bitcoin and Ethereum has just given up all new gains earned following this week’s upbeat CPI report.

Bitcoin, the largest cryptocurrency by market capitalization, fell nearly 4% in the past 24 hours and now hovers at just over $17,000 per CoinGecko. Bears have also regained control of Bitcoin on a weekly basis, with the cryptocurrency down 1.2% over the past seven days.

Ethereum, meanwhile, has fallen nearly 6% in the past day, according to CoinGecko. It’s still about $200 away from dropping into triple-digit territory, trading at just over $1,200.

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

In the last 24 hours, ETH posted more than $45 million in liquidations, while BTC posted approximately $33 million. After that, Dogecoin ($3.3 million), and Litecoin ($3 million) were the second largest liquidations, according to liquidation data obtained from Coinglass.

More than 92% of all liquidations in the last 12 hours were blown out of long positions.

The latest carnage comes hot on the heels of a Tuesday CPI report that suggested hot inflation in the US could be cooling.

Bitcoin, Ethereum reverse course after CPI report

On Tuesday, the US Bureau of Labor Statistics indicated that inflation was indeed still rising according to its readings, but the pace at which it had risen was slower than last month. This suggests that the Federal Reserve’s hawkish attempts to hoard rampant 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. Interest rates rose in November by 0.1%, which is lower than how quickly these prices rose in October. At the time, the CPI report indicated that prices rose by 0.3%.

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

But with year-over-year inflation still above a whopping 7.1%, the Fed’s job is not done. A day after the report was published, the central bank signaled that it would continue to raise interest rates, but instead of a 0.75% increase, it went back to 0.5%.

As interest rates rise, money becomes more expensive to borrow, which can have ripple effects across the economy as the Fed tries to slow spending. It also makes it more tempting to hold cash, as interest rates in commercial banks are also rising, giving investors a less risky return than entering the stock market.

As such, both stocks and cryptocurrencies fell. And until inflation is brought back below 2%, per the Fed’s wishes, the ongoing crypto bear market shows little sign of returning to new highs.