Thursday’s Market Update

The cryptocurrency market is experiencing a sharp decline on Thursday, with Bitcoin (BTC) leading the charge, dropping by 4% over the past 24 hours. This downturn is largely attributed to the re-acceleration of inflation pressure in September, which has raised concerns among investors and traders.

Re-Acceleration of Inflation Pressure

The U.S. Consumer Price Index report for September showed an unexpected increase in inflation rates. This news has sent shockwaves through the market, leading many to wonder if the Federal Reserve will cut interest rates as much as previously thought. Some market participants are even speculating that the Fed might pause its rate-cutting cycle altogether.

"Hot CPI and oil price spike due to Middle East tensions have created a fear that the Fed will not cut as much as the market previously thought," said Quinn Thompson, founder of hedge fund Lekker Capital, in a Telegram message. "Mix in [Atlanta Fed President] Bostic’s hawkish comments today regarding a potential pause and that’s the tinder to run the levered traders’ stops."

Regulatory Scrutiny

The sell-off has been exacerbated by the U.S. Securities and Exchange Commission (SEC) lawsuit against digital asset market maker Cumberland DRW. The SEC alleged that Cumberland traded crypto assets that were sold as securities without registering as a securities dealer.

Cumberland pushed back against the lawsuit, stating that they are not making any changes to their business operations or the assets in which they provide liquidity as a result of this action by the SEC.

Altcoin Performance

While Bitcoin has taken the biggest hit, altcoins have fared somewhat better. The CoinDesk 20 Index, which tracks the performance of a broad-based basket of cryptocurrencies, declined by just under 3% over the past 24 hours. Ether (ETH) dropped 3.5%, while Uniswap’s token (UNI) was the only altcoin to show a positive return during the day.

Leveraged Long Positions

The sell-off has liquidated some $147 million of leveraged long positions betting on higher prices across crypto derivatives markets, according to data from CoinGlass.

Regulatory Environment

The regulatory environment for U.S. crypto firms continues to be challenging. On Wednesday, the Department of Justice charged four market makers and more than a dozen individuals over market manipulation charges. SEC Chair Gary Gensler was also critical of the crypto industry, calling it "filled with fraudsters" and asserting that the leading lights of the sector were either in jail or soon to be on their way behind bars.

Market Outlook

Lekker Capital’s Quinn Thompson believes that Bitcoin is likely to trade range-bound until the U.S. election in November. "There’s going to be a lot of noise between now and [the U.S.] election, and it’s likely bitcoin is just range bound until then," he added.

Conclusion

The cryptocurrency market is experiencing a difficult time, with prices plummeting amid concerns over inflation and regulatory scrutiny. As the market continues to navigate these challenges, investors and traders would do well to remain vigilant and adaptable.

Table of Contents

Thursday’s Market Update

The cryptocurrency market is experiencing a sharp decline on Thursday, with Bitcoin (BTC) leading the charge, dropping by 4% over the past 24 hours. This downturn is largely attributed to the re-acceleration of inflation pressure in September, which has raised concerns among investors and traders.

Re-Acceleration of Inflation Pressure

The U.S. Consumer Price Index report for September showed an unexpected increase in inflation rates. This news has sent shockwaves through the market, leading many to wonder if the Federal Reserve will cut interest rates as much as previously thought. Some market participants are even speculating that the Fed might pause its rate-cutting cycle altogether.

"Hot CPI and oil price spike due to Middle East tensions have created a fear that the Fed will not cut as much as the market previously thought," said Quinn Thompson, founder of hedge fund Lekker Capital, in a Telegram message. "Mix in [Atlanta Fed President] Bostic’s hawkish comments today regarding a potential pause and that’s the tinder to run the levered traders’ stops."

Regulatory Scrutiny

The sell-off has been exacerbated by the U.S. Securities and Exchange Commission (SEC) lawsuit against digital asset market maker Cumberland DRW. The SEC alleged that Cumberland traded crypto assets that were sold as securities without registering as a securities dealer.

Cumberland pushed back against the lawsuit, stating that they are not making any changes to their business operations or the assets in which they provide liquidity as a result of this action by the SEC.

Altcoin Performance

While Bitcoin has taken the biggest hit, altcoins have fared somewhat better. The CoinDesk 20 Index, which tracks the performance of a broad-based basket of cryptocurrencies, declined by just under 3% over the past 24 hours. Ether (ETH) dropped 3.5%, while Uniswap’s token (UNI) was the only altcoin to show a positive return during the day.

Leveraged Long Positions

The sell-off has liquidated some $147 million of leveraged long positions betting on higher prices across crypto derivatives markets, according to data from CoinGlass.

Regulatory Environment

The regulatory environment for U.S. crypto firms continues to be challenging. On Wednesday, the Department of Justice charged four market makers and more than a dozen individuals over market manipulation charges. SEC Chair Gary Gensler was also critical of the crypto industry, calling it "filled with fraudsters" and asserting that the leading lights of the sector were either in jail or soon to be on their way behind bars.

Market Outlook

Lekker Capital’s Quinn Thompson believes that Bitcoin is likely to trade range-bound until the U.S. election in November. "There’s going to be a lot of noise between now and [the U.S.] election, and it’s likely bitcoin is just range bound until then," he added.

Conclusion

The cryptocurrency market is experiencing a difficult time, with prices plummeting amid concerns over inflation and regulatory scrutiny. As the market continues to navigate these challenges, investors and traders would do well to remain vigilant and adaptable.