Dogecoin Soars, Bitcoin, Ethereum Recover Some Ground After Inflation Data: Analyst Says 'FTX Contagion Risks Remain Elevated'

Major coins regained buoyancy late on Thursday, after crashing a day prior, in wake of soft economic data released. The global cryptocurrency market cap shot up 8.85% to $880 billion at 8:41 p.m. EST. 

Price Performance Of Major Coins
Coin 24-hour 7-day Price
Bitcoin BTC/USD 7.8% -13.85% $17,454.51
Ethereum ETH/USD 11.9% -16.85% $1,278.40
Dogecoin DOGE/USD 18.6% -22.9% $0.09
Top 24-Hour Gainers (Data via CoinMarketCap)
Cryptocurrency 24-Hour % Change (+/-) Price
Chiliz (CHZ) +38.9% $0.22
Polygon (MATIC) 30.5% $1.11
FTX Token (FTT) +34.6% ​​$3.42

See Also: Robinhood vs. Review

Why It Matters: Gains in Dogecoin surpassed those in Bitcoin and Ethereum at the time of writing after cryptocurrencies staged a recovery following data that showed October inflation cooled down to 7.7%, below estimates of 8%. 

Thursday's data indicates that steps taken by the U.S. Federal Reserve are having an impact on moderating price rises.

"This inflation report was a nice surprise.  Inflation has been very slow to come down, but this report gives up hope that this deceleration with pricing pressures might bring back hopes of a soft landing," said Edward Moya, a senior market analyst with OANDA.

"This inflation was a good sign that the Fed is on the right path for winning this war with inflation, but there will still be a lot of variables thrown its way over the next couple of quarters. The Fed could easily bring rates to 5.00% and if inflation proves to be [more sticky], it could be as high as 5.50%," said Moya, in a note seen by Benzinga.

On the current crisis, Moya said, "FTX contagion risks remain elevated and while today's broad-based crypto rally is rather impressive with Bitcoin rising over 10% and Ethereum surging by 16%, investment into cryptocurrencies will likely struggle here as too many key institutional investors and crypto companies have money tied up with the bankruptcy bound exchange."

On Thursday, cryptocurrency and decentralized finance platform BlockFi said it was "limiting" activity and pausing client withdrawals, citing uncertainty over the FTX crisis.

Michaël van de Poppe tweeted that Bitcoin should have been at $25,000 in wake of the drop in consumer price inflation. 

"Patience required as FTX just happened and need to see how [the] coming 48 hours develop," said the trader.

Justin Bennett noted that the dollar index was down 1.8% at the time he tweeted. The trader said, "Last Friday’s 2% decline was the largest single-day percentage drop since 2015. Crazy to have two daily candles like this in two consecutive weeks."

The dollar index was seen at 108.41 at the time of writing. In recent months, the index and Bitcoin and cryptocurrencies have had an inverse relationship.

The highest negative funding rates in 2022 are currently in play, said CryptoQuant analyst Minkyu Woo.

"It can be interpreted that many traders are placing short positions on BTC and are willing to pay long traders," said the analyst. 

"In general, massive liquidations which are opposite to the funding rates are likely to occur."

Read Next: Tron’s Justin Sun Says Working With FTX to ‘Initiate Pathway Forward’ After Binance Fallout

Market News and Data brought to you by Benzinga APIs
Posted In: CryptocurrencyNewsTop StoriesMarketsMoversTrading IdeasBitcoindogecoinEthereum
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!