Bitcoin (BTC) slumped this week, losing 5.3% to a three-week low of $58,900.
Bitcoin (BTC) slumped this week, losing 5.3% to a three-week low of $58,900. The decline came as data showed that the surprising strength of U.S. consumer inflation stirred fears about how the Federal Reserve might look to influence interest rates.
Action from the cryptocurrency market seemingly hangs on growing recession fears for investors. The Consumer Price Index rose by 0.2% month-over-month for September, raising concerns of "stagflation," arguably the worst-case economic scenario in which prices increase with stagnating growth.
Contributing to market nerves, U.S. jobless claims rose to a 14-month high. The fact that this figure was influenced by a labor strike by Boeing did little to distract from the more general implications for economic well-being.
The bearish feeling further came as U.S. spot Bitcoin ETFs saw consecutive outflows of $59 million on Oct. 8-9. Reversals from the recent inflow sequence suggest weakening investor confidence in near-term price prospects.
If that weren't enough, the SEC also filed a complaint against Cumberland, a leading market maker, for allegedly acting as an "unregistered dealer" in swaps of cryptocurrencies. That only poured more fuel on the fire of uncertainty in an already skittish market.
The cautious outlook is finding its reflection in derivatives markets. The premium on Bitcoin futures, which usually keeps a 5-10% annualized rate in neutral markets, has fallen below the threshold of 5% for the first time in more than two months. That change also replicates a similar bearish pivot in August that preceded a spectacular 24.6% price plunge over three days.
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