Bitcoin Dips To $32,500 As Inflation Hits A 13-Year High
Bitcoin continues to squeeze into a tight consolidation range of low-$30,000s, trading at $32,511, more than 4% down on the week, as of 7:10 a.m. ET, according to crypto data aggregator COIN360. The cryptocurrency, promoted as a hedge against inflation but still seen as a risky asset, took a slight dip on the news of accelerating inflation yesterday. Per a report from the Labor Department, the consumer price index, measuring the average change in prices paid for goods and services, increased 5.4% from a year earlier, the largest jump since August 2008.
Despite yesterday’s drop bitcoin’s 7-day volatility keeps declining and currently sits at 2.76%, while the 30-day volatility is now back to March levels when bitcoin consolidated above $50,000 according to analysis from Norgegian crypto analytics firm Arcane Research.
This dampened volatility matches trading activity in the derivatives markets, where open interest is consolidating and trading volumes are falling to 2021 lows, according to data from Glassnode. Since the May sell-off, futures open interest has remained bound between $10.7 billion and $13 billion, 57% below the all-time high set in April when Coinbase went public. Volumes across futures markets have fallen 62.5% and 49% compared to May and June respectively, now standing at $45 billion of futures traded per day.
Glassnode analysts write, “With such a significant decline across all derivatives markets, it becomes increasingly likely that market volatility will be driven by spot volumes, rather than short/long squeezes or leveraged liquidations.” In June, trading volumes at major cryptocurrency exchanges, including Binance, Coinbase and Kraken, fell by more than 40% compared to the previous month, according to crypto market data provider CryptoCompare.
This sentiment is mirrored by Jehan Chu, founder and managing partner of Hong Kong-based crypto investment firm Kenetic Capital. In a message to Forbes he wrote, “Lower prices, volume, and sentiment are working together to create further downward pressure on the crypto markets. With a lack of positive sentiment in both the crypto and macroeconomic markets, we can expect sideways and downward movement for the near term, while whales and institutions continue to slowly add to their positions and consolidate a floor.”
Altcoins are also trading in the red. Ether fell below $2,000 for the first time this month yesterday and continues to trade south of that level, worth $1,950 as of press time. The cryptocurrency shed 16.01% over the past seven days though the upcoming upgrade to the Ethereum protocol, on track for August launch, may reverse the trend.
Cardano, XRP and Litecoin are similarly down by nearly 4%.Source