Cryptos Rally After U.S. Inflation Update

Cryptocurrencies rallied in the past 24 hours as markets cheered the more than expected cooling in consumer price inflation in the U.S. However sticky core inflation limited gains. Anxiety ahead of the European Central Bank’s interest rate decision and release of producer price inflation from the U.S. on Thursday morning also weighed on sentiment.

According to data released by the U.S. Bureau of Labor Statistics, headline annual inflation in the U.S. declined to 2.5 percent in August from 2.9 percent in July. With a fifth consecutive month of decline, inflation dropped to the lowest since February 2021. The level has pleasantly surprised markets which had expected a reading of 2.6 percent. The core component excluding the volatile fuel and food components remained steady at the over three-year low of 3.2 percent as expected.

While headline monthly inflation remained steady at 0.2 percent on expected lines, the core component thereof which was expected to be steady at 0.2 percent unexpectedly edged up to 0.3 percent.

In response to the inflation update which showed core inflation remaining sticky, the expectation of interest rate traders tilted towards a 25-basis points cut. The CME FedWatch tool shows an 87-percent likelihood of a 25-basis points rate cut in September. Only 13 percent probability is currently assigned to a 50-basis points rate cut in the review scheduled for September 18.

Despite the cooling in headline inflation, the disappointment of core inflation missing expectations reflected in the Dollar Index as well as bond yields. The 6-currency Dollar Index is currently at 101.74 versus 101.68 at close on Wednesday and 101.63 at close on Tuesday. Ten-year U.S. bond yield is currently at 3.671 percent versus 3.651 percent at close on Wednesday and 3.640 percent at close on Tuesday.

Overall crypto market capitalization is currently at $2.05 trillion versus $1.99 trillion a day earlier.

Bitcoin which touched a high of $58,454 after the inflation update is currently trading at $58,155. BTC had touched a low of $55,567 in the past 24 hours. The leading cryptocurrency has gained 3 percent overnight and 2.1 percent in the past week. Though Bitcoin’s current price is 21 percent below the all-time high, it has recorded gains of 37.6 percent on a year-to-date basis.

Data from Farside Investors on Bitcoin Spot ETF products in the U.S. showed a net outflow of $44 million on Wednesday as compared with a net inflow of $117 million on Tuesday. Ark 21Shares Bitcoin ETF (ARKB) topped outflows with $54 million followed by Grayscale Bitcoin Trust (GBTC) that recorded outflows of $4.6 million. Grayscale Bitcoin Mini Trust (BTC) also recorded net outflows of $0.5 million. Fidelity Wise Origin Bitcoin Fund (FBTC) topped inflows with $12.6 million. Invesco Galaxy Bitcoin ETF (BTCO) also recorded inflows of $2.6 million. No other ETF recorded any flows on Wednesday.

Ethereum which touched a high of $2,390 and a low of $2,279 in the past 24 hours is currently changing hands at $2,358, around 52 percent below the all-time high. With losses of close to 2 percent in the past week, the leading alternate coin’s year-to-date gains have fallen to 3.4 percent.

Data from Farside Investors on Ethereum Spot ETF products in the U.S. showed a net outflow of $0.5 million on Wednesday as compared with net inflows of $11.4 million on Tuesday. VanEck Ethereum ETF (ETHV) recorded outflows of $1.7 million which surpassed inflows of $1.2 million in Fidelity Ethereum Fund Fidelity (FETH). No other ETF recorded any flows on Wednesday.

4th ranked BNB (BNB) rallied 6.5 percent overnight and 7.7 percent in the past week to trade at $544.04.

5th ranked Solana (SOL) gained 2.7 percent overnight, lifting gains to 1.6 percent in the past 7 days. SOL is currently trading at $134.89.

7th ranked XRP (XRP) rallied 0.93 percent overnight to trade at $0.5373. The cryptocurrency issued by Ripple Labs is grappling with weekly losses of 2.7 percent and year-to-date losses of more than 12 percent.

8th ranked Dogecoin (DOGE) gained 1.8 percent overnight to trade at $0.1023.

9th ranked Toncoin (TON) rallied 3.1 percent overnight. TON is currently trading at $5.39.

TRON (TRX) ranked 10th overall has added 1.3 percent in the past 24 hours to trade at $0.1542.

87th ranked Popcat (POPCAT) topped overnight gains with a surge of more than 18 percent. 31st ranked Sui (SUI) followed with gains of more than 16 percent. 100th ranked Pendle (PENDLE) added 15.9 percent overnight followed by 24th ranked Artificial Superintelligence Alliance (FET) that rallied 11.3 percent.

21st ranked Internet Computer (ICP) that has shed 3.1 percent is the only cryptocurrency among the top 100 to record overnight losses of more than a percent.

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