Financial markets suffered major turmoil on Thursday amid worrying inflation data, with cryptocurrencies bearing the brunt of investor jitters ahead of the release of the key Consumer Price Index (CPI). .
The U.S. Bureau of Labor Statistics is scheduled to release the latest inflation numbers at 8:30 a.m. ET, a report that could have a major impact on Federal Reserve policy and market sentiment.
Cryptocurrency markets saw a sharp decline, with Bitcoin (BTC), the leading digital asset, plummeting 2.5% to $60,700, effectively erasing all gains from the previous week. Ethereum, the second-largest cryptocurrency by market capitalization, also fell 2.3% to $2,375, marking a modest weekly gain of 1%, according to CoinGecko data.
Alex Kupczykevich, senior market analyst at FXPro, attributed the economic downturn to macroeconomic factors. “The rise in the dollar has scared off cryptocurrencies,” Kupczykevich said in a memo. decryption. “This dynamic is easily explained by the strength of the dollar and the increasing attractiveness of bonds, which reduces Bitcoin’s institutional traction.”
The total valuation of the cryptocurrency market fell 3.4% over the past day to $2.2 trillion, a sharp contrast to the S&P 500's recent highs. The disparity in market sentiment is evident as traditional stock market sentiment remains in the “greed” zone at 72, while the Crypto Fear & Greed Index has retreated into the “fear” zone at 39. is.
Analysts are currently closely monitoring Bitcoin's key support levels.
CryptoQuant contributor Burak Kesmeci said the average cost of short-term Bitcoin holders continues to play an important role. “Broadly speaking, a close above $64,500 will give strength to the bulls,” he wrote. “However, the loss of $61,600, the average cost for 1-3 month holders, will seriously test the patience of Bitcoin investors.”
Adding to the market pressure, news broke earlier this week that the US Supreme Court refused to hear an appeal questioning the legality of the US government's plan to sell 69,000 seized Bitcoins.
BRN analyst Valentin Fournier said: decryption Despite the potential selling pressure, it appears that the market has already priced in this news and Bitcoin could recover from the current decline.
“While these outflows remain relatively modest, they do indicate that institutional support is waning as bullish momentum fades,” he added.
Looking ahead to the CPI data, economists expect September's month-on-month increase to be 0.1%, down from August's 0.2%.
The annual rate of increase is expected to be 2.3%, slowing from August's 2.5%. Core CPI, which excludes volatile food and energy prices, is expected to rise 0.2% month-on-month and maintain an annualized growth rate of 3.2%.
Edited by Stacey Elliott.
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