The cryptocurrency market experienced a significant upswing on Wednesday, as cooling U.S. inflation data and renewed political uncertainty surrounding the Federal Reserve reignited demand for scarce, non-sovereign assets.
Over the past 24 hours, Bitcoin (BTC) climbed over 4%, breaking through the $95,000 mark for the first time in a week and approaching its January trading range highs. Ethereum demonstrated even stronger momentum, surging more than 7% to around $3,330. Other major tokens, including Solana (SOL), Cardano (ADA), XRP, and Binance Coin (BNB), saw gains of up to 9%.
This rally was fueled by U.S. inflation data that came in softer than expected, reinforcing market expectations for sustained interest rate cuts by the Fed this year. The cooling inflation has alleviated upward pressure on bond yields and improved market liquidity conditions—a historically favorable environment for cryptocurrencies and other risk assets.
Political tensions added further fuel to the fire. Reports that the U.S. Department of Justice served a grand jury subpoena to the Federal Reserve earlier this week unsettled market sentiment and weakened the U.S. dollar, thereby enhancing the appeal of assets perceived as hedges against central bank policy risks.
Bitcoin's price is now nearing levels that previously triggered significant sell-offs. Meanwhile, derivatives data indicates that market leverage is rapidly re-accumulating, suggesting that market volatility could increase in the near term.
The rally was accompanied by substantial liquidations in the futures market. Data from Coinglass shows that over the past 24 hours, liquidations in the cryptocurrency derivatives market exceeded $688 million, with short position liquidations accounting for approximately $603 million of that total.
As cryptocurrency prices accelerated upwards, around 122,000 traders were liquidated. On the Binance platform, Ethereum versus Tether (ETHUSDT) contracts saw liquidations amounting to $12.9 million, constituting a major portion of this liquidation wave.
This lopsided liquidation structure underscores the extent to which traders had heavily bet on a market downturn ahead of the inflation data release, and the astonishing speed at which those bearish expectations completely unraveled.
Traditional stock markets also rallied, further reinforcing the risk-on sentiment in the cryptocurrency space.
Asian equities climbed to record highs, the price of silver broke above $90 per ounce for the first time, and gold hovered near its all-time peak.
These market movements indicate that investors are increasingly favoring assets that can benefit from a looser financial environment and potential turmoil within the monetary system.
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