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Bitcoin (BTC) reacted positively to the rise in the CPI inflation, however, tanked sharply later on resulting in $700 million worth of liquidations in a very short while.
On Wednesday, November 10, the world’s largest cryptocurrency Bitcoin (BTC) made a strong move upwards hitting a new record high above $69,000. However, Bitcoin failed to break past the crucial $70,000 levels and plummeted immediately after that.
From its all-time high, Bitcoin (BTC) witnessed a 10% or $7000-drop in its price moving to $63,000 levels. The initial jump in the Bitcoin price came on the backdrop of the inflation data for the month of October. The Consumer Price Index (CPI) surged a staggering 6.2% in comparison to last year’s October. This has been the sharpest increase in over three decades since the 1990s.
Speaking to Bloomberg, Sui Chung, chief executive of CF Benchmarks said:
“Bitcoin continues to enjoy the rally that began in August and accelerated through September and October. The latest leg of its rally began in anticipation of the October launch of a Bitcoin-futures ETF, but “seems to now be fueled by the sustained inflation that we are witnessing across all the worlds major economies.”
Major Wall Street players have been hinting at the rising inflation and thus betting on Bitcoin as an inflation hedge. Furthermore, Bitcoin rival and yellow metal physical gold has underperformed over the last year while Bitcoin continues to advance further.
The spot price of Gold has dropped by 1.8% so far this year. In the same time period, the BTC price has surged by more than 130%.
Bitcoin Price Drop after Record High Results in Major Liquidations
Although Bitcoin’s initial reaction was positive to the rising inflation data, it couldn’t sustain long. This is because the stock market reacted negatively to the news and crypto markets followed immediately.
As the Bitcoin price nosedived immediately, over $700 million worth of long positions were liquidated in a flash. Data from Bybt shows that 81% of the liquidation came from long positions with a majority of them on Binance. The largest single liquidation happened on BitMex with a face value of $65.6 million.
As of press time, the BTC price has marginally recovered and is currently trading at $64,476 with a market cap of $1.216 trillion. While Bitcoin has been known for its volatile price swings, the recent drop might have given jitters to investors.
But the BTC price continues to trade close to its all-time highs as of now. Analysts have given a price target of $100K and more for Bitcoin by the end of the year.