‘Inflation has peaked’ premature narrative, impact to stay: crypto experts

US inflation for September was recorded at 8.3% year-on-year (YoY), signaling a slower-than-expected decline in high prices. This led to a strong sell-off in global markets. The impact of the numbers has been more pronounced in the crypto market. And according to experts, it’s here to stay.

“All [crypto] market is an off-sentiment market. There is no clear sentiment on where the market is headed and when it will start to rise…Until sentiment changes, we will continue to see pressure on Bitcoin and other cryptocurrencies.” said Manish P Hingar, a chartered accountant and founder of a financial planning platform, Fintoo, said.

The CoinDCX research team told Business Standard that the latest numbers suggest that the “inflation has peaked” narrative may have been slightly premature. The market consensus is that the Fed will raise interest rates by 75 basis points in the September 21 announcement, they added.

Bitcoin, the largest cryptocurrency by market capitalization, has fallen almost 10% since the figures were announced and was trading at $20,367.16 on Wednesday, according to coinmarketcap.com. Ethereum, the second largest digital coin, fell nearly 8%.

“Volatility led to approximately $104 million in crypto liquidations in less than an hour the day after the announcement marked the removal of overstretched speculative positions from the market,” CoinDCX added.

“Such market conditions make it clear that many projects, including big ones, will not survive to see a rebound or even a correction,” said Johnny Lyu, CEO of crypto exchange KuCoin.

Other cryptocurrencies such as Solana, Avalanche, and Luna were more affected and fell more than 10% in the past 24 hours.

Another downfall, Hingar said, was that the IT sector primarily uses cryptocurrency. “Whenever the IT sector is in trouble, we see the impact on cryptocurrencies,” he added.

He added that the Indian crypto market is more speculative than other countries and the impact will be deeper here.

In the days ahead, “the best approach is a wait-and-see attitude that carries little risk and protects available capital for better times,” Lyu added.

“The crypto market capitalization looks set to retest the $1 trillion level amid more negative macro data as crypto prices have become tightly linked to other risky assets,” CoinDCX said. .

According to market data on Wednesday, the crypto m-cap was $996 billion.

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