Bitcoin Hits One-Month High Ahead of US Inflation Data

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Bitcoin Hits One-Month High Ahead of US Inflation Data
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Bitcoin rallies to one-month high as the top cryptocurrency's share of the total market jumps above 41%. Reports godbole17

Bitcoin rose on Tuesday as investors braced for crucial U.S. data likely to show that the consumer price index growth is slowing in response to Federal Reserve's aggressive liquidity tightening.

Bitcoin probably benefitted from haven flows stemming from the unease about the health of the dominant cryptocurrency exchange Binance. The cryptocurrency's dominance rate, or the share in the crypto market, rose to 41.4%, the highest since Oct. 29. Historically, traders have piled into bitcoin, lifting its dominance rate during times of stress in the broader market.

Meanwhile, the growth in core CPI, which strips out the volatile food and energy component, is expected to have slowed to 6.1% from October's 6.3%.in favor of easing, bringing cheer to risk assets. The Fed has raised rates by 375 basis points since March to control rampant inflation and the liquidity tightening has ruined risk assets, including bitcoin.

Open interest refers to the dollar value locked in the number of active futures contracts. The funding rate, charged every eight hours by exchanges, refers to the cost of holding bullish/bearish positions in the perpetual futures market. A negative rate implies bears are paying the bulls to keep their positions open and leverage is skewed on the bearish side.

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