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Bitcoin and Ethereum: Crypto markets swing on softer inflation read

Bitcoin (BTC) enjoyed a strong intraday bump on Tuesday following the softer-than-expected inflation read in the US.

Annual inflation came down to 4.9% in April, the lowest in two years and slightly below market forecasts of 5%.

As a result, bitcoin jumped to an intraday high of US$28,330, though the rally was short lived, with the world’s largest cryptocurrency ultimately closing the day 0.21 lower at US$27,600.

The swift retraction caused a flurry of long-BTC liquidations totalling nearly US$50mln in the latter hours of the trading session.

Bitcoin has switched into negative territory on a week-on-week basis, with around 5.5% of losses clocked.

Bitcoin (BTC) had a sharp price swing on Wednesday – Source: currency.com

Sky-high transaction fees seen in recent times due to extreme network congestion have scaled back from nearly US$30 per transaction on Monday to around US$14 today.

As reported in Bloomberg this week, bitcoin, and the crypto markets as a whole, are suffering from a significant decline in liquidity as prominent market makers including Jane Street and Jump Trading pull away amid regulatory uncertainty in the US.

Reduced capital in the markets could lead to increased volatility.

For now, bitcoin is hovering around US$27,550 after dipping 0.24% in this morning’s Asia trades.

Ethereum (ETH) cut a similar path following the inflation read, hitting an intraday high of US$1,890 before paring back to US$1,840 by the end of Wednesday’s trades.

At the time of writing, the ETH/USDT pair was sitting closer to US$1,830 having knocked off around 0.35% in morning trades.

Altcoins extend losses

Blue-chip altcoins including Ripple (XRP), Cardano (ADA), Dogecoin (DOGE) and Solana (SOL) continue to underperform against bitcoin, with weekly losses in the upper single digits.

Polygon (MATIC) is faring even worse with over 13% in losses, while Tron (TRX) remains the only top-20 cryptocurrency to remain in the green.

The FLOKI meme coin entered the top-100 set overnight following an upgrade to its protocol which pushed its market capitalisation close to US$350mln.

Global cryptocurrency market capitalisation stayed relatively flat at US$1.14tn over the past 24 hours, while total value locked in the decentralised finance (DeFi) space fell 0.7% to US$49.1bn.

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