Bitcoins Jumps Most In 6 Months as Hope For 2023 Rate Cut Persist
In June 2023, ING expects a rate cut followed by more easing in the second half of the year. Major cryptocurrencies jumped early Friday.
According to CoinDesk data, Ethereum (ETH), which is scheduled to experience a major technological upgrade next week, bounced 4% to $1,705, and the leading cryptocurrency by market value, Bitcoin (BTC), rose 8.6% to $20,997.
The rally turned out to be touched off by the assumption that risky assets, such as cryptocurrencies and stocks, next year might be able to draw strength from central banks as regards monetary easing as economic conditions get worse and inflation subsides.
MSCI’s largest index of Asia-Pacific shares, aside from Japan, rose 0.3%. The futures tied to S&P 500 jumped 0.3%, indicating an extension of a two-day rally. The European stock future showed a sign of positive open.
There was a drop of 0.7% in the dollar index, making it 108.80, showing continued weakness in the greenback.
Bitcoin short squeeze
The fast price movement caused major trading-position liquidations on cryptocurrency exchanges.
CoinDesk reported last week that In recent weeks, lots of traders used futures and other various contracts to bet that the bitcoin price would drop more. This is known as shorting BTC. The sentiment became so negative that analysts argued the setup might get attractive for a short squeeze.
In the past 24 hours, $101 million of short positions were liquidated due to the sudden upswing in price. This is the most since its June 14 crash.
Supply chain pressures easing
Powell said on Thursday at a think tank conference that “we need to act strongly right now,’’ repeating his commitment to fighting inflation accompanied by rapid-fire interest rate hikes.
However, forward-looking markets concentrated on leading indicators that showed the stubbornly high COVID-19 pandemic period inflation would reduce in the coming months, thereby weakening the case for a continuous rapid-fire Fed tightening.
Early this week, Global container freight rates dropped to 16-month lows. This is nearly half their 2021 peak in proof of easing supply chain issues.
Last year Freight rates rose nearly 10-fold when the Coronavirus pandemic brought about supply chain problems. This added to the inflation.
