Bitcoin and Crypto Erase Early Losses After Inflation Data, Bounce Back Strongly

After weeks of stable performance, the last 24 hours have been the period of massive volatility for Bitcoin and the broader crypto market. On Thursday, October 13, the United States released its inflation data for the month of September 2022.

At 8.2%, the inflation turned out to be 0.6% higher than that of the previous month. As the CPI numbers came higher, Bitcoin and the border cryptocurrency market took a sudden dive.

The BTC price tanked 4.4% straight away moving all the way down to $18,175. The border cryptocurrency market also tanked nearly 4% in hours of the CPI release. All of the top-performing altcoins tanked anywhere between 4-7% during the same time.

However, Bitcoin and the border cryptocurrency market took a major u-turn in the day. Following the drop, there was a huge short covering for Bitcoin and the altcoin space. The BTC price hit a 3-week high short vs. long exchange ratio with many trader betting against the rise got liquidated heavily.

As of press time, Bitcoin is trading 3.7% up at a price of $19,700 with a market cap of $379 billion. Similarly, all of the other top-ten altcoins have recovered anywhere between 3-10%.

But what led to this sudden recovery in the crypto market. Well, once gain the crypto market followed the U.S. equity markets which posed a solid show on Thursday. After plunging more than 500 points during the early trading session, the Dow Jones Industrial Average rallied more than 800 points in the same day giving a 1,300 points move in a single trading session.

By the end of Thursday’s trading session, the Dow Jones industrial average was more than 2.5% up. With this move, Dow Jones managed to erase a week’s worth of decline in a single day.

As we know, Bitcoin and the border crypto market have shared greater correlation with the U.S. equity market. As a result, the rally on Wall Street was followed by the rally in the crypto market.

However, the red-hot inflation will continue to be a concerning factor for the U.S. economy. With inflation staying pretty high above the Fed’s target of under 2%, the Federal Reserve will be forced to announce further rate hikes in coming months. As per market analysts, the U.S. Federal Reserve will rate interest rates to 4-4.5% to tame the soaring inflation. This could probably mean a hard landing with the U.S. economy slipping into recession.