Bitcoin price pushed past the $26k mark this morning, peaking at $26,353 before retrenching its gains. As of this writing, the cryptocurrency is changing hands for $25,883.04, relatively unchanged from yesterday.
For the past week, bitcoin price has traded in a narrow range between $25,000 and $26,000 as the Securities and Exchange Commission (SEC) mounted fresh action against its ecosystem.
An Unexpected Price Jump
Today’s price jump was unexpected. As usual, many reasons being trotted out to explain it. One is the inflation data released by the Bureau of Labor Statistics. The U.S. Consumer Price Index (CPI) for May was 0.1%, as compared to 0.4% the previous month. However, the core CPI, which excludes volatile food and energy prices, maintained its steady march, clocking in a 0.4% increase, unchanged from the previous month.
Another possible reason could be increased odds that the Federal Reserve will not hike interest rates at its meeting tomorrow. The CME Fed Watch tool places the odds of such an occurrence at 93 percent, as of this writing.
What is not being discussed as a possible reason is the transfer of $174 million worth of bitcoin from miners to centralized exchanges since the start of this month. While the amount is not sufficient to cause a major slide in bitcoin price, it is enough to induce a blip that causes a minor price increase.
Tether Mints New Tokens
There might be more price volatility on the way. The Fed is expected to announce an interest rate decision later this week. Plus, crypto’s ever controversial, ever colorful rotating scandals and regulatory actions always generates price action, big and small.
The dry powder for another jump is waiting in the wings. Algorithmic stablecoin Tether announced that it had minted $1 billion worth of tokens on Ethereum. The tokens are authorized and not issued, meaning they are not being used for trading purposes. The stablecoin is also supposed to have send $750 million worth of Tether to Binance. The exchange is ground zero for Tether to maintain its peg with bitcoin.
Bitcoin liquidity has suffered since the beginning of June. According to data from Kaiko research, the cryptocurrency’s liquidity on Binance is down by 7%. The maneuvers of algorithmic stablecoin mean that less demand for bitcoin translates to a shaky peg for Tether.
XRP Also Jumps
Ripple’s token, XRP, also caught some of the action this morning, jumping by around 8% to $0.56, on news that documents related to a speech by former SEC commissioner Hinman might be included in its ongoing case with the agency. Because it trades for less than a dollar, the token lost those gains very quickly and is currently changing hands for $0.51.
XRP is one of the most egregious examples of crypto’s superfluous tokens. It serves no purpose in Ripple’s system and has not really caught on with the company’s customers.
How Hinman’s speech, which was about ether’s decentralized state and status as a commodity, relates to XRP is a mystery. They are two fundamentally creatures: one is a blockchain that aspires to become a hub for financial applications in the future while the other is a network for bank transfers. But then crypto narratives generally occur after the fact or fiction, depending on one’s perspective.