Bitcoin Surges Above $61K as Traders Turn Cautious Ahead of U.S. CPI
Date: 2024-08-14 Author: Henry Casey Categories: CRYPTO PAYMENTS
Bitcoin (BTC) surged above $61,000 in Asian trading on Wednesday, posting solid gains as it recovers from a major drop earlier this month. While Bitcoin gained more than 3%, other major cryptocurrencies such as Ethereum (ETH), Solana (SOL), Cardano (ADA), XRP, and BNB also saw gains of 2.8%. Meanwhile, popular meme coins dogecoin (DOGE) and shiba inu (SHIB) were up just 1%, indicating a waning appetite for riskier assets.
Bitcoin’s gains outpaced the overall gains of the CoinDesk 20 (CD20), which tracks the largest cryptocurrencies by market cap excluding stablecoins, which was 2.45%.
Despite the positive momentum, some funds remain cautious ahead of the upcoming U.S. inflation data, which could cause short-term market jitters. Cryptocurrency firm QCP Capital noted that investors are eagerly awaiting U.S. consumer price index (CPI) data to get an idea of how the Federal Reserve will adjust interest rates in September. Whether the Fed will cut rates by 50 or 25 basis points remains an open question.
Bitcoin’s recovery on Wednesday was a boost for traders who were hurt by the market’s 20% plunge in early August, triggered by the unwinding of yen-based leveraged trades. However, some analysts warn that the effects of that process are not yet complete. Thus, Richard Kelly, head of global strategy at TD Securities, expressed doubts about the completion of the unwinding of positions in trading using the yen in an interview with CNBC. He noted that further strengthening of the yen could significantly change the valuation of assets over the next one to two years, which will lead to additional market adjustments.
The Bank of Japan recently raised interest rates for the first time in a decade, which destabilized global markets and risk assets, including Bitcoin. In an environment of low rates, traders actively borrowed yen to invest in assets with higher yields, which created the so-called "interest rate trade". The rate hike reduced the profitability of such strategies, which caused significant volatility in the market. As a result, Bitcoin lost 15% of its value in 24 hours, which was one of the largest drops in recent years.
In addition to Bitcoin, traders continue to remain bullish on Toncoin (TON). During the Asian trading session on Wednesday, TON rose by 7%. The Toncoin ecosystem cites the growth of GameFi on the platform and integration with Telegram as key factors contributing to the token’s growth. According to John Cheang, head of the TON Foundation in the Asia-Pacific region, the number of users of games on the TON platform significantly exceeds the figures of previous blockchain games, which provides significant revenue from the gameplay.
Thus, despite the difficult macroeconomic environment and market fluctuations, Bitcoin and Toncoin continue to show steady growth, attracting the attention of traders and investors.
