Cryptocurrency

Bitcoin Tumbles Below £59K Amid Inflation Worry, Regulatory Onslaught on Crypto

Published

2 months ago

October 11, 2024

Bitcoin coin falling under dark stormy clouds.

Bitcoin has experienced a significant decline, dropping below £59,000 amid rising inflation concerns and increased regulatory scrutiny. The cryptocurrency market is facing multiple challenges, leading to a sharp downturn in prices, particularly for Bitcoin, which fell by 4% in a single day.

Key Takeaways

Bitcoin’s price fell below £59,000, marking a 4% decline.
Inflation pressures have intensified, impacting market sentiment.
The SEC’s lawsuit against Cumberland DRW has raised regulatory concerns.
Analysts predict Bitcoin will remain range-bound until the U.S. elections.

Inflation Concerns Impacting Bitcoin

The cryptocurrency market began the day on shaky ground following the release of the U.S. Consumer Price Index (CPI) report, which indicated an unexpected re-acceleration of inflation in September. This news has led to fears that the Federal Reserve may not cut interest rates as aggressively as previously anticipated.

Quinn Thompson, founder of Lekker Capital, noted that the combination of rising inflation and geopolitical tensions, particularly in the Middle East, has created uncertainty in the markets. He stated, "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."

Regulatory Scrutiny Intensifies

The situation worsened for Bitcoin as the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Cumberland DRW, a major digital asset market maker. The SEC alleges that Cumberland traded crypto assets classified as securities without proper registration.

Cumberland responded to the lawsuit, asserting that it would not alter its business operations or liquidity provisions in light of the SEC’s actions. This lawsuit is part of a broader trend of regulatory scrutiny facing the cryptocurrency sector, with the Department of Justice also charging several market makers for alleged market manipulation.

Market Reactions and Predictions

The sell-off in Bitcoin has led to the liquidation of approximately £147 million in leveraged long positions across crypto derivatives markets. This indicates a significant shift in market sentiment, as traders react to the combination of inflation fears and regulatory pressures.

Analysts suggest that Bitcoin may remain range-bound until the upcoming U.S. elections in November. Thompson emphasized that there will likely be considerable volatility and noise in the market during this period, making it challenging for Bitcoin to regain upward momentum.

Conclusion

As Bitcoin tumbles below £59,000, the cryptocurrency market faces a confluence of inflation worries and regulatory challenges. With the SEC’s actions and broader economic concerns weighing heavily on investor sentiment, the future trajectory of Bitcoin remains uncertain. Traders and investors will need to navigate this complex landscape as they look ahead to the U.S. elections and beyond.