Following the release of macroeconomic data in the United States, inflation worries have resurfaced, causing an uptick in volatile investment products, including cryptocurrencies led by Bitcoin. As Bitcoin reached $49,000 during the day, it later traded at $46,074. The Consumer Price Index (CPI) for December indicated a faster-than-expected rise in prices, contradicting the anticipated slowdown in inflation.
The U.S. Bureau of Labor Statistics reported that the CPI increased by 0.3% monthly, against a 0.2% expectation, and by 3.4% annually, compared to the 3.2% forecast. This marked a greater increase than the 3.1% rise in the previous 12-month period ending in November.
The CPI announcement, typically a trigger for volatility in risk assets, has heightened tensions in the crypto markets. On January 10th, the first U.S. spot Bitcoin exchange-traded fund (ETF) was approved, with January 11th set as the first trading day for ETFs. A popular investor, Jelle, expressed optimism about Bitcoin’s future growth despite the current chart not being ideal for shorting.
Amid these developments, Ethereum outperformed Bitcoin, surpassing a 10% gain in 24 hours following the ETF decision, which appeared to prompt an investor rotation. However, this trend did not sustain. Crypto Tony noted that many are now flocking to Ethereum as Bitcoin has not met their expectations for a rally.
The ETH/USD pair reached $2,666 during the day, hitting its highest levels since early May 2022. Despite the temporary gains, the market remains cautious amid ongoing inflation concerns and new financial products entering the space.
