Recent rally in the cryptocurrency market has been triggered by an unexpected drop in the Consumer Price Index (CPI) to 2.7%, below the anticipated 2.8%. This has led to price surges across various cryptocurrencies.
Post-CPI Rally
The CPI decline has provided a strong impetus for cryptocurrencies, leading to significant price increases. Solana (SOL) surged by 12.9% to $198.48, while Chainlink (LINK) rose by 12.5% to $24.21. Ethereum (ETH) also climbed to $4,670.
Altcoins Dynamics and Institutional Flows
Expectations of Federal Reserve rate cuts are fueling increased interest in cryptocurrencies. Altcoins such as ADA ($0.85), DOGE ($0.23), SUI ($3.91), and XRP ($3.25) have also seen growth. This highlights that the surge in cryptocurrencies may be driven not only by retail interest but also by institutional flows.
Liquidation Risks Due to Leverage
Some analysts point to a significant rise in open interest on derivatives, which has jumped from $26 billion to $44 billion over the month. This reflects not only a risk appetite but also potential market fragility. The increase in leverage heightens the risk of liquidations, especially among altcoins, where risk management becomes essential.
The recent surge in the cryptocurrency market post-CPI highlights investor interest and notable shifts in market dynamics. However, the rise in leverage and open interest poses significant liquidation risks.
