Cryptocurrency market maker Wintermute analyzed the rise in Bitcoin and Ethereum following the release of June inflation data in the US. The company stated that there are signs of recovery in the structure of the cryptocurrency market, but the upward trend is not yet confirmed.
The US consumer price index (CPI) fell 0.4% month-on-month in June, marking its largest monthly decline since April 2020. Annual inflation also dropped from 4.2% to 3.5%, below market expectations of 3.8%.
Following the inflation data, markets largely excluded the possibility of a Fed rate hike in July from their pricing. However, renewed tensions between the US and Iran and the renewed discussion of port blockades caused Brent oil to rise by 15.54 percent during the week.
Risky assets showed divergent performance. During the same period, Ethereum gained 3.64% and Bitcoin gained 1.46%, while the Nasdaq index fell by 4.16%.
Following the release of US inflation data, Bitcoin surged from approximately $62,000 to $64,900 in a short period. Ethereum also rose by up to 7%, reaching $1,884. As a result of the rapid market surge, approximately $134 million worth of short positions were liquidated within an hour.
Spot Bitcoin ETFs traded in the US recorded net inflows of approximately $191 million on Tuesday and Wednesday, ending a ten-day streak of outflows from ETFs.
Wintermute stated that the recent inflows were a positive development, but compared to the record net outflow of $4.5 billion recorded in June, the current magnitude was insufficient to confirm a new trend.
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According to the company, Bitcoin’s ability to maintain its gains following the inflation data release during the sell-off in chip stocks indicates an improvement in the structure of the cryptocurrency market. However, a definitive upward trend has not yet formed in the market.
Wintermute stated that the relative strength of the market could be confirmed if spot Bitcoin ETFs record uninterrupted net inflows for a week and the Bitcoin price remains above $66,000 for several trading days.
However, it was added that macroeconomic risks could intensify again if Brent oil rises above $90 or if the Strait of Hormuz is officially closed, and the positive assessment of the cryptocurrency market could lose its validity.
*This is not investment advice.
