Bitcoin Plunges Below $59,000, Inflation Concerns and Regulatory Pressure Weigh on Crypto MarketBitcoin suffered a significant setback on Thursday, plummeting over 4% to break below the $59,000 mark. This drop marked a new low since the Federal Reserve's unexpected 50 basis point rate cut in mid-September
Bitcoin Plunges Below $59,000, Inflation Concerns and Regulatory Pressure Weigh on Crypto Market
Bitcoin suffered a significant setback on Thursday, plummeting over 4% to break below the $59,000 mark. This drop marked a new low since the Federal Reserve's unexpected 50 basis point rate cut in mid-September. This decline is primarily attributed to a double whammy of mounting inflation concerns and tightening regulatory scrutiny in the United States.
Inflation Rekindled, Fed Rate Cut Expectations Cool
The release of the US Consumer Price Index (CPI) data on Thursday revealed an unexpected acceleration in inflation for September, seemingly diminishing market expectations for another 50 basis point rate cut by the Fed in November. Some market participants have even begun to question whether the Fed will pause its rate-cutting cycle altogether during this meeting. The prospect of escalating inflation has dampened investor appetite for risk assets, thereby driving down prices for cryptocurrencies like Bitcoin.
Regulatory Storm Brews, Crypto Industry Takes Another Hit
Beyond inflation worries, the US government's regulatory actions targeting the crypto sector this week have fueled market anxieties. On Thursday, the Securities and Exchange Commission (SEC) filed a lawsuit against CumberlandDRW, a prominent digital asset market maker, alleging that the company sold crypto assets as securities without being registered as a broker-dealer. Cumberland responded, stating that the suit will not alter its business operations or the liquidity assets it provides.
Just a day before the SEC filed its complaint against CumberlandDRW, the US Department of Justice levied market manipulation charges against four market makers and over a dozen individuals. Meanwhile, SEC Chair Gary Gensler voiced strong opposition to the future prospects of Bitcoin or cryptocurrencies being used as a means of payment. He accused the crypto industry of being overrun with "scammers" and claimed that the industry's "leaders" are either already behind bars or headed there.
Outlook: Range-Bound Fluctuations Will Become the Norm
Quinn Thompson of Lekker Capital suggests that the crypto market will face multiple pressures between now and the US presidential election, with Bitcoin likely to remain range-bound during this period. He anticipates that the US government might intensify its regulatory scrutiny of the crypto industry in the coming weeks, while the persistent pressure of inflation will continue to weigh on market sentiment.
In summary, Bitcoin's downturn on Thursday reflects the complex circumstances confronting the current crypto market. Inflation anxieties and regulatory pressures are intertwined, casting a shadow over investor confidence in cryptocurrencies. The crypto market will continue to navigate various challenges in the coming period, urging investors to exercise caution in observing market dynamics and prepare for potential risks.
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