Bitcoin and Ethereum reversed sharply higher within an hour of Friday's U.S. inflation report, wiping out more than $250 million in short positions. Ether topped $2,660 for the first time since late January, while Bitcoin climbed back toward $79,000 after a brief drop to a weekly low. The rebound came even as Treasury yields rose and spot Bitcoin ETFs kept losing money.
Bitcoin and Ethereum surged on Friday, and traders on the wrong side of the move paid for it fast. Data from CoinGlass showed over $250 million in shorts liquidated in a single hour, with more than half of that total wiped out in Ether positions alone.
Ether tops $2,660 as Bitcoin claws back a weekly low
Less than two hours earlier, the market looked bearish as traders braced for the U.S. CPI print. Bitcoin slipped from over $77,000 to a weekly low of $76,000 once the data landed roughly in line with expectations. It then reversed, climbing back to its starting point before jumping to $78,000 and then to almost $79,000.
Ether led the bounce. It posted an 8% daily gain, with more than 5% of that coming in the final hour, and briefly topped $2,660 for the first time since late January before pulling back slightly. On a daily scale, total liquidations across the crypto market reached $660 million, wrecking nearly 100,000 traders.
Inflation data matches forecasts, but rate-hike bets rise anyway
The August consumer price index rose 0.4% from July and 3.4% from a year earlier, both matching forecasts, easing fears of a hotter inflation print. Core CPI, which excludes food and energy, rose 0.3% for the month, and Bitcoin rose 1.9% to $78,914.6 by 10:09 ET, though it remained on track to lose nearly 2% for the week.
Even so, traders raised their bets on a Fed rate hike next week, assigning an 86% probability to a quarter-point move, up from about 70% beforehand, according to CME Group's FedWatch tool. According to Investing.com, Fed Chair Kevin Warsh warned the central bank will "have work to do" if inflation doesn't show clearer signs of returning sustainably to the Fed's 2% target.
Treasury bond buyback did not stop ETF outflows
The rally also ran against a backdrop of tightening financial conditions. The U.S. Treasury bought $5.187 billion of long-dated bonds on Sept. 10, yet the 10-year real yield still climbed 9 basis points to 2.55%, raising the return hurdle for a non-yielding asset such as Bitcoin.
Spot Bitcoin ETFs added to the caution: they posted a net outflow of $282.7 million on Sept. 10, according to Farside Investors. Bitcoin had closed that session at $76,568 before recovering toward $77,800, staying close to the $76,000 support cluster identified in recent market coverage, even as real yields and ETF flows still pointed to pressure.
Sources: CryptoPotato, Investing.com, CryptoSlate
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