The United States reported a higher-than-expected Consumer Price Index (CPI) for December, showing a monthly increase of 0.4% after seasonal adjustment, surpassing the forecast of 0.3%. The annual CPI rate climbed to 2.9%, the highest since July 2024, marking its third consecutive monthly rise.
The markets, both traditional and cryptocurrency, embraced the news with positivity. And what a move it was, as the price of Bitcoin literally shot up by over 2% in a matter of minutes.
Other popular cryptocurrencies such as XRP showed even more crazy dynamics, with a 3.5% gain in one minute. We are talking about a multi-billion dollar asset, and such a rapid change in price is worth not even millions, but billions, of dollars, so it is analogous to an earthquake.
For a specific group of investors — the sellers, or bears, as they are also called — it was indeed a bit like that.
Bears crushed: What's next?
As became known thanks to data from CoinGlass , the amount of short positions liquidated since the CPI release totaled $87.23 million, which is three times more than the amount of longs. In total, the liquidation of short positions amounted to $250 million, or an enormous quarter of a billion dollars, in just 24 hours.
What is 63% of that? Shorts, and most of them were liquidated after the CPI.
Among the top bear annihilators are traditionally Bitcoin and Ethereum, and this time XRP also made it to the top. As the third largest cryptocurrency, XRP jumped as high as $2.90, liquidating over $14 million in shorts alone. To put that in perspective, Bitcoin made $39 million and Ethereum made $28 million.
Where the market goes from here remains to be seen. All the major news of January, at least on the monetary policy side, has happened. Upcoming is the resignation of Gary Gensler, the current SEC chairman, in five days, and a change in the U.S. administration.
These developments could introduce new dynamics for cryptocurrencies like Bitcoin, Ethereum and XRP, leaving investors speculating on whether bullish or bearish trends will dominate in the coming weeks.
