Crypto Rally Fizzles As Inflation Pain Sinks In

Crypto markets which had rallied more than 1 percent post the release of the inflation numbers from the U.S. on Tuesday have now corrected around 1.5 percent amidst renewed fears of a forceful action by the Fed to combat inflation.

Consumer Price Inflation reading for the month of March touched 8.5 percent, the highest reading since December 1981 and versus 7.9 percent recorded in February. Core Inflation increased to 6.5 percent from 6.4 percent in the previous month. Markets were expecting a headline reading of 8.4 percent and a core inflation of 6.6 percent.

Meanwhile, data released on Wednesday showed producer prices in the U.S. increasing 1.4 percent month-over-month in March, far exceeding the market forecasts of 1.1 percent.

Crypto market sentiment also remains impacted amidst a strong showing by the U.S. Dollar. The Dollar Index, which measures the Dollar’s strength against a basket of six currencies touched a fresh 52-week high of 100.52.

Overall crypto market capitalization is hovering around $1.85 trillion, dominated 40.8 percent by Bitcoin, 19.6 percent by Ethereum, 10.1 percent by stablecoins and 29.5 percent by the residual altcoins.

Bitcoin has moved in a much tighter range of $39,389.66 – $40,617.59 in the past 24 hours, versus the $39,373.06 – $41,239.77 range before the release of the CPI reading. BTC is currently trading at $39,834.06, down 1.77 percent on an overnight basis and 11.24 percent on a weekly basis.

Ethereum too is treading a tight range, within $2,976.72 and $3,077.45, versus $2,957.87 – $3,062.54 range a day ago. ETH is currently trading at $3,019.55, down 1.39 percent on an overnight basis and 9.00 percent on a weekly basis.

The Smart Contracts category market capitalization has dropped 1.4 percent overnight to $540 billion or 29.11 percent of the overall market. Ethereum (ETH), BNB (BNB) and Cardano (ADA) are the current toppers in the category. BNB is trading more than half a percent lower in the past 24 hours whereas ADA is down close to 4 percent.

DeFi market capitalization has fallen more than 2 percent to $144 billion or 7.80 percent of the overall crypto market. 9th ranked Terra (LUNA) tops the category with a market cap of close to $30 billion. At its current trading price of $83.89, LUNA is down more than 4 percent on an overnight basis and more than 24 percent on a weekly basis.

Market Capitalization of NFT & Collectibles dropped to $41 billion or 2.2 percent of the overall market. Metaverse category market capitalization has fallen to $28 billion or 1.53 percent. Gaming category also recorded a drop in market cap to $26 billion or 1.41 percent of crypto market.

33rd ranked Decentraland (MANA) tops all the three categories with a market cap of $3.9 billion. MANA is down more than 3 percent in the past 24 hours and more than 12 percent in the past 7 days.

39th ranked Apecoin (APE), the governance token of the Bored Ape Yacht Club NFT collective, has rallied more than 3 percent in the past 24 hours and is now ranked the second most valuable cryptocurrency in the Metaverse, NFT and Gaming categories.

15th ranked SHIBA INU (SHIB) which had surged following the listing it got on American financial services platform Robinhood is currently trading 3 percent lower on an overnight basis. The Meme category market capitalization has fallen marginally to $33 billion in the past 24 hours. 11th ranked Dogecoin (DOGE), the leader in the category is however down 4 percent on an overnight basis and 10 percent on a weekly basis.

The volatility in cryptocurrencies is expected to continue as markets brace for a large interest rate liftoff by the Fed. The surge in commodity prices with the war in eastern Europe is also likely to goad other central banks to use interest rates as a potent tool to cool the red-hot inflation. All eyes would now be on the European Central Bank that would be reviewing its monetary policy stance on Thursday.

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