Dump and Pump: Bitcoin (BTC) Does Major Short Covering in Hours After CPI Release
On Thursday morning, the U.S. reported its worse-than-expected CPI data for September 2022 leading a major slide in the crypto market. Bitcoin and the border crypto market reacted immediately with the BTC price tanking all the way down to $18,000.
However, as on-chain data provider Santiment reported, the BTC price started rising higher as the short vs long ratio on exchanges touched a 3-week high. The data provider noted:
Traders shorted #Bitcoin & #altcoins heavily as #inflation news broke. When $BTC hit a 3-week high short vs. long exchange ratio at 2pm UTC, prices reversed course & began rising, & many betting against #crypto got liquidated. Prices move toward the crowd’s least expectation.
Note that this short covering in the Bitcoin price came along with the strong bounce in the U.S. equities. Following the 8.2% CPI numbers for September, the Dow Jones Industrial Average tanked nearly 300 points in the early trading session.
However, by the end of the day, Dow Jones ended up more than 800 points in the positive. Bitcoin and the broader crypto market followed this price action simultaneously.
Sign of Caution for Bitcoin Investors
As of press time, Bitcoin is trading 3.76% up at a price of $19,811 with a market cap of $379 billion. While Bitcoin has given the recent price jump to $20,000, it continues to still rank lower in terms of social dominance. As Santiment states:
Traders are chasing short-term pumps right now to salvage losses. Weak hands dropped out of #crypto in 2022, & long-term traders are waiting for #Bitcoin to begin receiving the spotlight again. When $BTC social dominance is high, prices typically rise.
Along with Bitcoin the altcoin space is also showing an overall recovery. The world’s second-largest cryptocurrency Ethereum (ETH) is also up 3.36% and is trading at a price of $1329 with a market cap of $163 billion. It will interesting to see if Bitcoin and the broader crypto space can hold up longer to this recent price rally.
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