Investors Bargain Hunt as Inflation Report Spurs Market Rally

Well that’s a relief.

The crypto market rallied on Thursday after the U.S. government released data that shows inflation cooled in October to its lowest level since January.

Investors seized on the good news amid the worst week for crypto since May, when the Terra ecosystem collapsed. Bargain hunters appeared to be scooping up tokens at heavily discounted rates even though FTX, the embattled crypto derivatives exchange, is desperately searching for a white knight to inject fresh capital in its depleted coffers.

Two-year Low

Ether jumped almost 7%, to almost $1,300 after plunging toward the $1,000 mark on Wednesday after Binance walked away from its emergency takeover of FTX.

Bitcoin, which hit a two-year low Wednesday, jumped almost 6%, to $17,600. Solana and Polygon, whose native tokens had fallen especially sharply over the past several days, both jumped 12% each.

With the annualized consumer price index falling to 7.7% from 8.2% in September, investors are betting the Federal Reserve may back off raising interest rates at 0.75% intervals, as it has been doing this year to dampen inflation. The U.S. Bureau of Labor Statistics released the data Thursday morning.

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The Defiant

More than 80% of investors are betting on a .5% interest rate hike at the Fed’s next meeting, on Dec. 14, according to the CME FedWatch Tool. That would end a string of .75% hikes, the largest in decades.

While that would be a boon for crypto and other high-risk, high-reward assets, the industry is still on a knife’s edge after the fate of FTX remains uncertain.

Tether, the largest dollar-pegged stablecoin with a market cap of $67B, briefly slipped its peg around 8:30 a.m. Eastern time, dropping as low as 96 cents per token. It was edging back toward 98 cents in late morning trading.