- Kava price jumped for the third straight day on Wednesday.
- Other altcoins that did well were Arbitrum, Fantom, and Terra Classic.
- Bitcoin sell-off capitulated after the encouraging US inflation data.
Kava crypto price rose for the third straight day on Wednesday as the recent Bitcoin sell-off faded. The token jumped to a high of $0.90, the highest level since April 19th. It has jumped by more than 29% from the lowest point this year. Similarly, Arbitrum price jumped for the second straight day and reached a high of $1.2160 while Fantom rose to $0.40.
Bitcoin sell-off capitulates
Kava, Arbitrum, and Fantom prices jumped because of no internal news. Therefore, the main reason for the rally is mostly because of the performance of Bitcoin, which has been in a major sell-off this week. Bitcoin has been falling because of the congestion that pushed Binance to suspend its withdrawals.
As a result, Bitcoin crashed from the year-to-date high of $31,000 to a low of $27,260. On Tuesday, this Bitcoin sell-off capitulated as the price humped to $28,200. In most periods, altcoins like Kava and Fantom tends to rise when Bitcoin is soaring and vice versa.
A likely reason why Bitcoin is rising is that there are signs that the congestion that happened on Monday is easing. This is evidenced by the fact that the average cost of a Bitcoin transaction has dropped from Tuesday’s $30 to $20.
Encouraging US inflation data
The other reason why these altcoins are doing well is that the US published encouraging consumer inflation data. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation in the US rose from 0.1% in March to 0.4% in April. This increase translated to a year-on-year retreat from 5.0% to 4.9%.
Core inflation, which excludes the volatile food and energy prices, dropped from 5.5% in March to 5.4% in April. This decline was in line with expectations. Therefore, these numbers showed that the country’s inflation continued falling.
As a result, there is a likelihood that the Federal Reserve will decide to pause its interest rate hike in the coming months. Besides, several central banks like the Bank of Canada and the Reserve Bank of Australia have proven that inflation can fall after pausing rate hikes.
Cryptocurrency prices do well in a period when investors are anticipating a change in tune by the Fed. This also explains why American indices like the Russell 2000, Dow Jones, and the Nasdaq 100 have bounced back.
Contributors
