Despite fresh macro data revealing a resurgence in United States inflation, Bitcoin surged higher as the Wall Street session opened on September 14. Bitcoin’s strength in price persisted after the previous day’s close, seemingly unfazed by the implications of the U.S. inflation rebound confirmed by the Consumer Price Index (CPI) and Producer Price Index (PPI) August figures. The latter reported a year-on-year increase of 1.6%, surpassing market expectations of 1.3%. In this context, the crypto market, like traditional markets, appeared to dismiss the notion that U.S. macro policy might adopt a more restrictive stance to curb inflation in the long run. Over the past month, approximately $55 billion has been withdrawn from the crypto markets. These capital outflows haven’t only affected Bitcoin but have also had an impact on Ether and the liquidity of stablecoins in the crypto market.
Bitcoin
Bitcoin reached new highs for September, peaking at $26,762. It experienced a modest 2% increase in price on Thursday, driven by signals from the European Central Bank (ECB) suggesting that its tenth consecutive interest rate hike may be its last. Despite the seemingly calm waters in the crypto market, there are bullish undercurrents for Bitcoin (BTC), hinting at the potential for a significant price rally. One key indicator is the percentage of Bitcoin’s circulating supply that has been active on-chain within the past month. This metric recently reached a record low of 5.4%, indicating a decrease in the number of coins changing hands and suggesting weakness on the supply side. Additionally, about 70% of the circulating supply has remained inactive for over a year, showing a preference for long-term holding among Bitcoin holders. While the potential launch of a spot Bitcoin exchange-traded fund (ETF) is on the horizon, several months away, there are macroeconomic and regulatory concerns that may favour bearish sentiment in the short term. These factors make for an intriguing mix of factors in the Bitcoin market.
Ethereum
Ethereum’s price has been gradually increasing, with it trading around 0.5% higher in the last 24 hours at approximately $1,610. This marks a nearly 5% rise from its weekly lows in the $1,530s. On Tuesday, Ethereum conducted a substantial coin burn, sending 3,725.34 Ether (approximately $6,081,252) to an unusable wallet. This move effectively reduced the coin’s supply, which could potentially increase its value. The coin burn took place when Ethereum was trading at around $1,632.40 per unit. However, Ether is still struggling to surpass its 21-day moving average (DMA), which has been serving as strong resistance recently, as well as a downturn that began in August. A break above these resistance levels would be necessary for the short-term outlook to improve. Although a retest of the March lows around $1,370 is possible, the fundamental outlook does not necessarily support such a decline. Therefore, strong dip buying may occur. Additionally, Ether futures ETF approvals in the US are expected in the coming months, with spot ETF approvals likely to follow next year.
Macro Corner
On the macro front, the U.S. Consumer Price Index (CPI) saw a notable surge of 0.6% compared to the previous month. This increase represents the most significant monthly rise in over a year, with a significant portion of the surge attributed to rising gasoline prices. On the other hand, when excluding the volatile categories of food and energy, core prices experienced a more moderate increase of 0.3%, slightly surpassing the anticipated 0.2%. Nevertheless, when considering the broader trend, core inflation continues to move downwards, edging closer to the Federal Reserve’s preferred target of 2%. Rising interest rates implemented by central banks like the European Central Bank and the Federal Reserve have had a significant impact on various investment assets, including stocks and crypto assets.
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