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1:27 PM ยท 13 September 2022

Crypto panic after US inflation report ๐Ÿ“Œ

The inflation reading above forecasts in the US surprised markets, which had expected a inflation slowdown. We see a decline in sentiment around risky assets:

  • The US dollar is gaining again. A 75bp hike in September is almost certain but a small decline despite falling gasoline prices should perhaps challenge the Fed. Core inflation rose above expectations and July reading:
  • The Fed's pivot, played up somewhat 'by force' by the markets in the context of the weak reading, appears to be a mirage. On the Fed's September table could be a hike of as much as 100 bps (!), which the market is currently pricing in a 23% probability;
  • Cryptocurrencies, despite the upcoming Ethereum Merge, have not been able to resist huge selling pressure. Bitcoin slides below $22,000, Ethereum falls below $1,700;
  • Among the so-called altcoins, Graph (-10%), Kusama (-8%) and Stepn (-6%) are losing the most heavily. 

Ethereum chart, H1 interval. The inflation reading caused a sharp decline and stopped ETH from climbing above the 200-session average, which is now again a key short-term resistance (around $1730). The RSI indicator cooled immediately from levels near 70 to below 30 points, which illustrates the panicky reaction of sellers. Source: xStation5

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