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Bitcoin Nosedives After Reclaiming $28K on Mildly Positive CPI Print, LUNC and KAVA Lead Top Gainers

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The majority of top cryptocurrencies, including Bitcoin, whose price lulled around new lows of $27,600 at the start of the week, traded flat coming off Tuesday. The flagship asset started bleeding ahead of the new crypto-week following Binance's suspension of BTC withdrawals. The exchange conveyed in later updates that it resolved to temporarily pause withdrawals on two occasions, roughly eight hours apart, compelled by unprecedented network congestion. This clogged state of the network has been attributed to the unfaded popularity of Ordinal inscriptions and ballooning trading activity around BRC-20 tokens.

US annual inflation rate rises to 4.9%

Crypto prices across the board recovered sharply on Wednesday, propelled by the cheery sentiment derived from freshly released Consumer Price Index (CPI) data. April numbers from the US Bureau of Labor Statistics came in better than expected for the most part, sparking optimism among market participants regarding the macro influence.

The core CPI year-over-year of 5.5% matched expectations, while prices rose 0.4% month-on-month compared to a 0.1% increase recorded in March. The CPI figures inspired a brief breakout in the market, as seen in the case of Bitcoin, which raced past $28,000 shortly after the annual inflation rate reading on Wednesday morning. However, the modest rally was short-lived as markets started correcting in the afternoon, sending prices lower than pre-CPI print levels.

BTC/USD price chart

Last week, the Federal Reserve announced a 25-basis point hike to interest rates adding that the run of hikes since last March has proved effective in cooling inflation. In accompanying remarks, Fed Chair Jerome Powell said the next move pertaining to interest rates adjustment would depend on upcoming economic data and other macro headwinds. While the US Federal Reserve has repeatedly reaffirmed its commitment to achieving a 2% inflation target, observers foresee a pause bringing to an end the historical series of hikes totaling 500 bps.

Worth noting, the Federal Reserve is not expected to meet until next month, when it will convene on June 14 to discuss the subsequent adjustment to the interest rates and related monetary policies meant to tame inflation. The June date of the Fed policy meeting effectively means it will come after another CPI report. Current target rate predictions show markets are inclined towards pivoting in the Fed’s next meeting.

Bitcoin (BTC) price action

A sharp decline towards $27,600 accompanied Wednesday morning's rally, wiping away all prior gains. Bitcoin retraced to an intraday low of $26,883 but has since started an ascent towards $28K and was last spotted inching upwards of $27,750.

To learn more about Bitcoin, check out our Investing in Bitcoin guide.

Altcoins spotlight

Arbitrum (ARB), Kava (KAVA), Terra Classic (LUNC), and Woo (WOO) lead top gainers in the last 24 hours, each fueled by separate narratives.

Terra Classic (LUNC) tops the charts and was trading 10.81% in the green today at press time. The renewed interest comes on the back of a recently submitted proposal on a forthcoming upgrade to the Terra Classic chain (v2.0.0) expected later this month. Terra Classic represents the original Terra ecosystem which imploded last May. In recent months, its community members have initiated developments to breathe some life into the network.

“This release contains governance approved features to the Terra Classic blockchain, including minimum initial deposit for governance proposals, Cosmos SDK v0.45.13, and Tendermint v0.34.24. This is the second major release that will utilize the upgrade governance proposal mechanism to upgrade the chain,” the team advancing the proposal explained.

Last month, the Luna Classic L1 Task Force, which oversees the development of the network, shared a detailed roadmap entailing milestones to be accomplished in Q2.  In addition to the key target dates for the v2.0.0 upgrade, the status update also outlined the budget forecast for the quarter.  The Task Force marked out May 17 for the Columbus-5 production upgrade and May 31 for the Cosmwasm v1.1.0 upgrade.

Meanwhile, Kava (KAVA) which has been on a steady uptrend for consecutive days since Sunday, is showing weakness around its current range and was last spotted at $0.88. KAVA's modest gains earlier this week followed news of the decentralized lending protocol Mare Finance launching on Kava's layer one.

To learn more about Kava, check out our Investing in Kava guide.

ARB is also ranging in the green today. The layer two project explained in a Twitter thread on Monday the ins and outs of its fee management model. Arbitrum is set to distribute 3,352 Ether tokens worth nearly $6.2 million to its newly launched decentralized autonomous organization, Arbitrum DAO. These tokens include troves of 582 ETH of surplus from L1 fees, 1,308 ETH from base fees and 1,462 ETH surplus from L2 fees.

Liquidation data. Source: Coinglass

The latest display of volatility has seen over $180 million worth of trader positions liquidated in the last 24 hours, per Coinglass data. Long bets dominate the liquidated volume against shorts which account for $66.38 million.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.