Bitcoin Jumps to $21K After Soft US Data, Less Hawkish BoC
The modest crypto rally continued on Wednesday after the Bank of Canada (BoC) surprised with a smaller than expected rate hike and new home sales in the U.S. continued to weaken.
Widely expected to raise its benchmark interest rates by 75 basis points (after a 75-point hike in September and a 100-point move in July), the Bank of Canada instead bumped by just 50 basis points to 3.75%. The bank's accompanying statement showed some concern about economic growth: "Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving."
Shortly after the BoC news, the U.S. Census Bureau reported a 10.9% decline in new home sales in September as buyers continued to pull back in the face of sharply higher interest rates. The weak economic data could help lead the U.S. Federal Reserve to follow the BoC and throttle back on the pace of monetary tightening – a possible bullish development for bitcoin.
The two items helped bitcoin (BTC) continue its modest rally this week, with the crypto up 7.5% over the past 24 hours and earlier climbing above $21,000 for the first time since mid-September. At press time, the price had pulled back to $20,850.
Earlier on in the day, the crypto market saw the largest short liquidations (bets against price rises) since July 2021, with traders taking huge losses as the price moved upward.
Ether (ETH), the second largest cryptocurrency by market value, has had an even larger rally this week, and is up 15% over the past day to nearly $1,600.