The most recent report on the U.S. Consumer Price Index (CPI) displayed a 0.4% increase in December, resulting in a yearly inflation rate of 2.9%. This rise, mainly fueled by escalating energy expenses, holds significant implications for various financial sectors, including digital currencies such as Bitcoin (BTC) and Ethereum (ETH).
Market response to CPI data
Subsequent to the CPI publication, Bitcoin observed a 4.12% surge in its price to approximately $100,510, reflecting investor confidence in possible Federal Reserve interest rate adjustments. Likewise, Ethereum witnessed positive movement in its value during the latest trading period, climbing over 7% to reach around $3,451.
These shifts indicate that cryptocurrencies are reacting favorably to inflation statistics owing to their attractiveness as alternative assets in inflationary economic conditions.
Liquidation dynamics post-CPI report
An analysis of the total liquidation data from the recent trading session post the CPI release indicated a notable increase in liquidations following the announcement, totaling nearly $330 million. Notably, Ethereum experienced substantial liquidation activity, amounting to over $67 million.
The market also observed a higher number of short liquidations, with recorded volume surpassing $223 million.
This trend emphasizes the assets’ susceptibility to macroeconomic factors and the speculative nature of the market.
Analysis of Ethereum’s Open Interest
An examination of Ethereum’s Open Interest (OI) chart revealed a significant upsurge in OI following the release of the CPI figures. The OI data showed a spike to approximately $6.5 billion during the recent trading session.
This rise indicates increased capital inflow into ETH’s Futures markets, reflecting growing investor interest and anticipated price movements. However, a high OI level can also suggest higher leverage, potentially leading to heightened volatility.
Ethereum’s price forecast
Ethereum’s price movement exhibited an interesting technical configuration, with the 50-day moving average at $3,562.47 maintaining a substantial gap above the 200-day MA at $2,980.39. The MACD indicator readings (0.53, -55.72, -56.25) indicated a potential shift in momentum, albeit in a delicate current market structure.
Driven by the CPI data revealing a 0.4% increase in December, Ethereum has approached significant resistance levels. The crucial support range at $3,200 is vital for preserving the existing market framework, while the $3,500 level represents immediate resistance.
Ethereum’s response to these macroeconomic triggers may influence its short-term price movements. While the derivatives market reflects heightened interest, the balanced liquidation patterns indicate a more mature market response to economic data compared to previous market cycles.