The cryptocurrency market saw intense volatility following the release of the U.S. Consumer Price Index (CPI). While uncertainty weighed heavily on altcoins throughout the morning, the inflation data—deemed reassuring by traders—triggered a spectacular turnaround. Bitcoin and Ethereum, after initial turbulence, posted notable gains of 4% and 8.3% respectively for the session before stabilizing amid high market anxiety.
This sharp acceleration triggered a massive wave of liquidations, totaling $758 million over a 24-hour period. The movement primarily hit investors betting on a decline, with nearly $412 million in short positions wiped out by the market. Ethereum was the primary target, with sellers recording $307 million in losses, illustrating the intensity of the shock for those anticipating a continued correction.
The mechanism at play is more indicative of a short squeeze than a massive influx of new buying capital. By forcing the automatic closure of short positions, the sudden price surge created a snowball effect, compelling traders to buy back their assets at a loss to cover their obligations. Approximately 100,000 accounts were affected during the day, highlighting the vulnerability of overly conservative strategies when faced with macroeconomic data that, while stable, was perceived as a sign of relief.
Despite this volatility, major cryptocurrencies remain far from their respective all-time highs. Investor attention is now shifting toward the next U.S. Federal Reserve meeting scheduled for September 16. While the market has digested this data, monetary policy outlooks remain the key issue for the days ahead. Caution is still advised, as without a real inflow of fresh liquidity, these price movements resemble a violent technical correction more than a lasting structural recovery.