Crypto markets are breathing a sigh of relief today after a key U.S. inflation report came in cooler than expected. The news has sparked a strong rally, lifting the total crypto market cap by nearly 5% in the last 24 hours to $2.44 trillion. Major coins like Bitcoin and Ethereum led the charge, showing fresh signs of life amid ongoing uncertainty.
Bitcoin (BTC) jumped 4.5% to climb back above $69,000. This move flipped its weekly performance positive at 1.7%, helping it shake off recent pressure.
Ethereum (ETH) stole the show with a 7.5% surge, pushing prices above $2,000 and weekly gains to 4.4%. Other top assets mostly followed suit, though not all kept pace.
Among the top 100 coins by market cap, Pi Network (PI) topped the gainers list with a 10% rise, closely followed by Midnight (NIGHT) at 9%. On the flip side, World Liberty Financial (WLFI) led losers with a 2.3% drop.
Prices are up, but trader mood is still shaky. Bitcoin’s net unrealized profit/loss metric has dropped to around 0.18, entering a ‘hope/fear’ zone. This signals thin profit buffers, where rallies often hit selling walls and dips can snowball as confidence wanes.
Markets feel fragile after the October 10 crash that erased nearly $20 billion in leveraged bets. High-frequency traders note ongoing worries about aftershocks. The Crypto Fear & Greed Index sits deep in ‘extreme fear,’ though it ticked up slightly from recent lows.
The rally wasn’t smooth. Over 90,640 traders faced liquidations in the past day, totaling $260 million in losses. Bitcoin took the biggest hit at $118.2 million, with Ethereum close behind at $56 million. These wipes highlight leverage’s dangers in volatile times.
Institutional interest remains cautious. Spot Bitcoin ETFs saw $410.4 million in net outflows yesterday, worse than the prior day. Spot Ethereum ETFs lost $113.1 million too. This pullback contrasts with the spot price bounce, suggesting big players are still on the sidelines.
The spark? Today’s U.S. Consumer Price Index (CPI) from the Bureau of Labor Statistics. Headline inflation rose 2.4% year-over-year in January, beating hopes for 2.5%. Core CPI, stripping out food and energy, hit 2.5% as expected.
This milder print eases fears of stubborn inflation. It boosts odds for Federal Reserve rate cuts later this year, a tailwind for risk assets like crypto. Lower rates mean cheaper borrowing, more liquidity, and higher appetite for high-growth investments. Historically, soft CPI data has triggered crypto rallies, as seen in past cycles.
For context, crypto thrives when real yields fall. Today’s data nudged 10-year Treasury yields lower, supporting the rebound. But with Fed Chair Powell’s speeches and jobs data ahead, volatility could return fast.
The rally offers short-term hope, but thin margins mean caution. Watch for:
Broader macro trends like potential rate cuts could fuel a bigger bull run. Yet, leverage cleanups and profit-taking pose risks. Traders should eye support levels: BTC at $65,000 and ETH at $1,900.
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