Markets: Bitcoin, Ether gain in crypto market rebound off slowing U.S. inflation

Bitcoin held onto gains in midday Friday trading in Asia, though lost some ground from the morning’s rebound. Ether and most other major tokens rose, reversing  a three-day slump as the Consumer Price Index (CPI) released Thursday showed inflation in the U.S. slowed in October. Leading stablecoin USDT saw a brief “de-pegging” from the US dollar as Tether, the issuer of the token, froze US$46 million of the asset held by the cash-strapped FTX exchange following a request from law enforcement.

Fast facts

• Bitcoin was 4.11% higher at US$17,040 in the 24 hours to noon in Hong Kong on Friday, while Ether gained 6.2% to US$1,237, according to CoinMarketCap.
• USDT, a stablecoin designed to maintain parity with the U.S. dollar, fell to as low as US$0.9815 late on Thursday night, according to CoinMarketCap. It was trading at US$0.9999 as of noon in Hong Kong or back at parity. Blockchain data aggregator WhaleAlert indicated Tether froze 46,360,701 USDT owned by FTX just one day after the U.S. Securities and Exchange Commission and Justice Department began an investigation into FTX following its liquidity crisis.
• Polygon saw the largest gains in the top 10 tokens by market capitalization, excluding stablecoins, gaining 18.84% to US$1.04, after jumping more than 30% in the morning. This came as a Walt Disney Co. “accelerator program” information video went live on Friday morning to showcase the blockchain’s integration with the mass media company. Polygon had gained earlier in the week following social media platform Instagram choosing the platform to host their NFT integration.
• Solana was up 7.10% at US$16.36, after rebounded 18% in the morning. It fell more than 40% over the past seven days as Alameda Research, the brokerage arm of FTX International, sold holdings this week to try and stop the run on FTX’s native token FTT, and Solana made up a large part of those holdings.
• U.S. equities surged Thursday to post the biggest one-day gains since 2020. The Nasdaq Composite Index rose 7.4%, the S&P 500 Index gained 5.5% and the Dow Jones Industrial Average finished 3.7% higher.
• CPI data released Thursday showed that inflation rose to 7.7% in October, a 0.4% rise from the same month a year ago, but lower than the 7.9% economists had predicted and the smallest monthly increase since January. Investors saw the CPI as a sign the interest rate hikes by the U.S. Federal Reserve are slowing inflation.
• U.S. interest rates are now at a 15-year high of 3.75% to 4% from near zero in March. The Fed has said it wants inflation back in a target range of 2%. It was running at 8.2% in September.