‘Inflation has peaked’ narrative too soon, impact to stay: Crypto experts
US inflation for September was recorded at 8.3 percent year-on-year (YoY), signaling a lower-than-expected fall in high prices. This led to a strong sell-off in the global markets. The impact of the numbers was more pronounced in the crypto market. And according to experts, it is here to stay.
“All [crypto] the market is an off-sentiment market. There is no clear sense of where the market is headed and when it will start going up…Until sentiment changes, we will continue to see pressure on Bitcoin and other cryptocurrencies,” Manish P Hingar, a Chartered Accountant and founder of a financial planning platform, Fintoo, said.
CoinDCX’s research team told Business Standard that the latest figures suggest that the “inflation has peaked” narrative may have been a bit premature. Market consensus is that the Fed will raise interest rates by 75 basis points in the September 21 announcement, they added.
Bitcoin, the largest cryptocurrency by market capitalization, has fallen nearly 10 percent since the announcement of the figures and was trading at $20,367.16 on Wednesday, according to coinmarketcap.com. Ethereum, the second largest digital coin, fell almost 8 percent.
“Volatility resulted in $104 million worth of crypto liquidations in the hour immediately following the announcement marking the removal of overleveraged speculative positions in the market,” CoinDCX added.
“Such market conditions make it clear that many projects, including large ones, will not survive to see a decline or even a correction,” said Johnny Lyu, CEO of crypto exchange KuCoin.
Other cryptocurrencies such as Solana, Avalanche and Luna have taken a bigger hit and have fallen over 10 percent in the last 24 hours.
Another factor for the plunge, Hingar said, was that the IT sector mainly uses cryptocurrency. “When the IT sector is hurting, we see the impact on cryptocurrencies,” he added.
He added that the Indian crypto market is more speculative than other countries and the impact will be deeper here.
In the coming days, “The best approach is to wait and see one that carries little risk and secures available capital for better times,” Lyu added.
“Crypto market cap looks set to retest the $1 trillion level on the back of more negative macroeconomic data as crypto prices have become intertwined with other risk assets,” CoinDCX said.
According to market data on Wednesday, the crypto m-cap was at $996 billion.
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