A Bitcoin logo inside a cryptocurrency kiosk in Madrid, Spain, March 17, 2022.
Angel Navarrete | Bloomberg | Getty Images
Cryptocurrencies climbed Thursday as the market took a pause from its two-day sell-off and investors digest key inflation data and the ongoing FTX saga.
Cryptocurrencies jumped right around the time CPI data was released, showing a smaller-than-expected rise and giving investors hope that price pressures may be cooling.
Bitcoin’s correlation with stocks hit an all-time high in late September but has been falling for about a month now, though it saw a small tick up on Wednesday, according to Coin Metrics. Stocks also rallied following the CPI data.
“The industry is changing before our eyes – high-rate environments can do that to a young market,” said Callie Cox, U.S. investment analyst at eToro. “Right now, it’s hard to digest from a price standpoint because crypto doesn’t have a fundamental center of gravity. But we know that society is moving toward a decentralized future, and blockchain technology has already proven to be immensely useful.”
The spike also comes as investors are still digesting the details of the ongoing crisis at FTX and the potential contagion its failure may spread across the market. On Wednesday bitcoin posted a two-day loss of about 24% and later in the evening fell further, to a new bear market low of $15,558.10. Ether lost about 32% over the two days.
Despite the current rise, bitcoin currently sits about 74% off from its all-time high hit exactly one year ago.
Bitcoin and ether, the largest two cryptocurrencies by market cap, led the rest of the market higher. Solana, which has been hit hard by the FTX scandal, climbed 37% after losing more than 70% this week. Even FTT, the FTX token at the center of the exchange’s troubles, jumped 28%. It dropped about 140% earlier this week.
Investors are still monitoring the situation at FTX, still unclear on the extent of the damage that has hit or will hit the rest of the market.
On Thursday, Sam Bankman-Fried, CEO of the troubled exchange, broke his silence on the matter and offered an apology to investors and the crypto industry for his failures in the liquidity crisis.
As the events unraveled this week investors hoped to see Binance save the day through a potential bailout, but its CEO announced late Wednesday that it had abandoned the idea.
Bankman-Fried is now in talks to raise capital to “be first used to do right by the customers,” he said in his apology tweets.