First Mover Americas: Crypto Markets Primed for Soft CPI

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More than $200 million in shorts (bets against price rises) have been liquidated in the last 24 hours as the major cryptocurrencies rallied. Bitcoin broke above $18,000, and ether rose over $1,400. Other coins like XRP and solana rose as much as 20%. The liquidations are in addition to those of more than $150 million earlier this week. Such levels haven’t been seen since October, data from Coinglass shows. Some analysts, however, believe the rally exemplifies indecisiveness among crypto traders, as BTC and ETH are trading with a consolidation pattern, according to QCP Capital. Consolidation refers to an asset oscillating between a well-defined pattern of trading levels, marking uncertainty in which direction it will break. is cutting around 110 jobs, amounting to about 28% of its workforce. The crypto brokerage previously let go about 150 people last July, after it took a hit of $270 million on a loan it had made to collapsed hedge fund Three Arrows Capital. The layoffs at add to those at other crypto firms, most recently at incubator ConsenSys and exchange Coinbase (COIN). CoinDesk estimates that more than 28,000 jobs have been lost in the crypto industry since last April.

With a loan from bankrupt crypto exchange FTX last year, BlockFi executives’ equity holdings were wiped out by $800 million. In exchange, they granted themselves pay rises of as much as $500,000 each. Founder Zac Prince saw $413 million in equity value eliminated, and was compensated by a salary hike of between $250,000 and $400,000. BlockFi’s lawyers have been keen to stress that there was no last-minute withdrawals prior to the collapse. BlockFi, a crypto lender, has also filed for bankruptcy.

Chart of the Day

  • The chart shows bitcoin rallied to a four-week high of $18,370 early Thursday, amounting to a 9% rally since the U.S. jobs report on Jan. 6 showed wage growth slowed in December.
  • The U.S. Dollar Index has traded weak since Friday, hitting its lowest level since June.
  • The classic risk-on action may indicate a market positioned for a softer-than-expected Consumer Price Index. Therefore, profit-taking in bitcoin is possible after the inflation numbers are released.
  • The consensus is for the data to show the year-over-year rate of headline CPI gains dropped to 6.6% in December from November's 7.1%. The core figure excludes the volatile food and energy component and is forecast to have dropped from 6.0% to 5.7%.

Omkar Godbole

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