The price of Bitcoin, the leading cryptocurrency by market capitalization, has suddenly surged above the $85,000 level, CoinGecko data shows.
The bellwether token is up by 1.8%, CoinGecko data shows.
Roughly $50 million worth of Bitcoin positions has been liquidated over the past hour alone, according to CoinClass. Short positions, of course, account for the lion’s share of this wipeout ($48 million).
The most recent rally has been primarily driven by a surprisingly soft inflation report. The Personal Consumption Expenditures Price Index increased 3.4% year over year in August. For comparison, analysts were expecting an increase of 3.7%, so there is a sizable difference.
The month-over-month figures were also rather mild, with the headline increasing by 0.3% .
Earlier this week, the flagship cryptocurrency dropped below $85,000 due to expectations of further monetary tightening.
Plunging rate hike odds
Expectations of an upcoming Federal Reserve rate hike have taken a hit due to the report.
The fact that the Fed now feels less pressure to tighten monetary policy bodes well for the leading cryptocurrency (and other risk assets as well).
As reported by U.Today, the Fed announced the first rate hike in years on Sept. 16. The move was meant to ease the path to the much-coveted 2% inflation target.
Earlier this week, traders were assigning roughly a 68%-70% probability to another quarter-point Fed rate hike at the Oct. 27-28 meeting.
However, New York Fed President John Williams said there was “no need for urgency” when it comes to another hike. This contributed to plunging rate hike odds. CME FedWatch pricing showed that the probability plunged from 70% to 51.5%.
The odds have now plunged well below 50% following the inflation report.