Market Wrap: Bitcoin Price Jump Fades After US Inflation Spike

Buyers failed to sustain a brief recovery in BTC, while altcoins underperformed.

Feb 10, 2022 at 9:27 p.m. UTC

Updated Nov 14, 2022 at 6:43 p.m. UTC

Traders work on the floor of the New York Stock Exchange. (Shutterstock)

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Angelique Chen

Angelique is a market contributor at CoinDesk.

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Bitcoin (BTC) recovered from a nearly 5% drop on Thursday after the January U.S. inflation report showed a 7.5% increase in prices, a four-decade high.

The increase in inflation was the fastest since February 1982 and exceeded economists' predictions of a 7.3% rise. The U.S. Federal Reserve is expected to raise interest rates next month, which could ease inflation over time. Tighter monetary policy could also weigh on speculative markets such as equities and cryptocurrencies.

Stocks also fell on Thursday, with the S&P 500 down as much as 2% over the past 24 hours, while Treasury yields rose above 2%.

In crypto markets, bitcoin outperformed most alternative cryptocurrencies (altcoins). Typically, during down markets, investors overweight bitcoin because of its lower risk profile relative to altcoins. BTC was roughly flat over the past 24 hours, versus a 4% drop in ETH and a 6% drop in SOL.

Latest prices

●Bitcoin (BTC): $44122, −1.25%

●Ether (ETH): $3114, −4.36%

●S&P 500 daily close: $4504, −1.81%

●Gold: $1828 per troy ounce, −0.40%

●Ten-year Treasury yield daily close: 2.03%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Some analysts expect selling pressure to eventually wane, while others expect slowing economic growth and tighter monetary policy will keep buyers on the sidelines.

"The simple explanation from our end is that there is major trading volume around economic data releases," Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors, wrote in a Thursday brief. "It’s possible that the carnage we witnessed the past several weeks already priced in a 50 basis point rate hike."

Fundstrat remains bullish on crypto, and it has advised clients to buy on dips through the first half of this year despite choppy price action and macroeconomic uncertainty.

Meanwhile, MRB Partners, an investment strategy firm, wrote in a note this week that stocks and bonds "will struggle to digest the less accommodative shift in global monetary policy over the next six to 12 months."

"There is further upside for government bond yields in the next year, although a pause likely looms in the near term," MRB wrote.

Altcoin roundup

Cartesi to expand its blockchain game ecosystem with Aetheras: Cartesi, which is trying to develop a layer 2 Linux infrastructure, is teaming up with Aetheras in the hope that future blockchain games can be created with its blockchain operating system. According to Cartesi, Aetheras' software will enable gamers to enjoy more flexibility to explore different games at the same time without the worry of losing their in-game assets. Read more here.
Streamr Network approaches a key milestone of decentralization: Streamr, a real-time data network, will become the open, permissionless and decentralized Brubeck Network on Feb. 24. Developers can now build on the Brubeck Network, or migrate their existing apps forward in anticipation of the official launch. Read more here.
FLOW tokens surge on mobile game Beijing 2022: The price of Flow’s FLOW token has risen 12% since Tuesday as nWayPlayNFT, a subsidiary of the Hong Kong-based game software company and venture capital firm Animoca Brands, launched an officially licensed play-to-earn mobile game called Beijing 2022. Read more here.

Relevant news

Other markets

Digital assets in the CoinDesk 20 ended the day lower.

Largest gainers:

Asset	Ticker	Returns	Sector
Ethereum Classic	ETC	+0.7%	Smart Contract Platform
Bitcoin Cash	BCH	+0.4%	Currency

Largest losers:

Asset	Ticker	Returns	Sector
Algorand	ALGO	−6.0%	Smart Contract Platform
Polkadot	DOT	−5.8%	Smart Contract Platform
XRP	XRP	−5.8%	Currency

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

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