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FX.co ★ Bitcoin retreats after briefly passing $25,000

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Analysis News:::2022-08-15T13:13:07

Bitcoin retreats after briefly passing $25,000

On Monday, bitcoin kicked off the new trading week with sharp gains. In early trade, the first cryptocurrency reached a new high, surging to $25,211, but then posted steep losses. At the time of preparing this material, the asset was trading at $24,170.

 Bitcoin retreats after briefly passing $25,000

According to CoinMarketCap, a virtual asset price tracking website, the value of BTC has risen by 7.5% over the past 24 hours.

At the same time, the past week turned out to be extremely successful for the digital currency. Over the seven-day period, the asset gained 4.5%.

The catalyst for its steady rise on the eve was data on cooling inflation in the United States published in the middle of last week.

The US Bureau of Labor Statistics revealed on Wednesday that the annual CPI inflation slowed to 8.5% in July from 9.1% in June. The current slowdown was the first in the last five months of 2022.

Such statistics came as a surprise not only to market experts, who expected inflation to decline to only 8.7%, but also to President Joe Biden's administration. The White House assumed that the inflation rate would rise permanently due to higher food prices, a decline in the country's economic output in January-June, and an armed conflict between Ukraine and Russia.

Traditionally, cooling inflation signals that the US Federal Reserve will take a less aggressive rate-rise stance. As a result, analysts lowered their forecast for the rate increase. Now they believe that at the September meeting, the Fed will raise interest rates not by 75 but only by 50 basis points.

Besides, an additional driving force behind the cryptocurrency market last week was the fact that major US stock indices had turned positive.

By the way, analysts note that since the beginning of 2022, there has been a growing correlation between virtual assets and the US stock market amid expectations of further steps by the US Federal Reserve and the consequences of the geopolitical conflict in Eastern Europe.

Earlier, experts from Oslo-based crypto research firm Arcane Research stated that a correlation between BTC and technology securities had reached the highest level since July 2020.

This week, the focus of cryptocurrency market participants will be on the quarterly earnings reports of major retail companies as well as data on retail sales to be published in the coming days.

Altcoin market

Meanwhile, ether, the main competitor of bitcoin, kicked off the trading session on Monday with a confident rise. By the time of preparing this material, it reached $2,001. Last weekend, the cryptocurrency broke through the important psychological level of $2,000. On Sunday, ETH surged by 19.2%.

Last week, the digital coin resumed an uptrend and outperformed bitcoin, gaining 12.8%.

The main driving force behind its rally was a statement by Ethereum developers that Goerli, the network's third and final testnet, had successfully switched over to a proof-of-stake (PoS) consensus algorithm. The next long-awaited step is the Ethereum mainnet merge scheduled for September 19, 2022. By the way, Ethereum developers have recently reported that the blockchain's full transition to proof-of-stake could be completed a few days earlier than expected.

Earlier, Ethereum co-founder Vitalik Buterin said that Ethereum's transition to proof-of-stake would boost demand for digital assets as everyday payments thanks to commissions reduced to 2 cents. According to the Canadian-Russian programmer, the popularity of crypto payments fell after 2018 due to high transaction fees.

According to The Block, a US technology company, open interest in ether options rose to a new high of $8.32 billion last week.

Experts believe that the key reason for such a sharp rise in demand for the digital currency was Ethereum's upcoming transition to proof-of-stake.

As for other cryptocurrencies among the top 10 coins by market capitalization, Dogecoin turned out to be the best performed. The cryptocurrency added 10.41% in the past 24 hours. Cardano was the biggest loser (-2.30%).

Last week, all digital assets from the top 10 list, except for USD Coin (USDC), Tether (USDT), and Binance USD (BUSD), showed spectacular positive dynamics. At the same time, the best results were posted by Solana (+18.3%) and Dogecoin (+16.84%). Binance Coin turned out to be the top loser (-0.41%).

According to CoinGecko, the world's largest crypto data aggregator, assessing the performance of 100 digital assets over the past 24 hours, the list was topped by the Shiba Inu coin (+34.1%). The biggest loser was Arweave NEXO (-5.5%).

As for the crypto market performance over the past week, the best performer turned out to be the Celsius Network coin (+ 207.1%), and the worst one was BitDAO (-16.1%).

Over the past seven days, the crypto Fear and Greed Index has soared by 17 to 47 points, thus moving from the fear zone to the neutral one.

Analyst InstaForex
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