Cryptocurrency prices dropped Thursday to new October lows after key U.S. inflation data came in hotter than expected.
Cryptocurrencies have been trading mostly sideways since the end of August, with bitcoin hovering within $19,000. That’s been a key level to watch for analysts, who say a break below it could lead to new lows below those hit in June, when bitcoin fell below $17,800 and ether fell under $900.
Prices dropped Thursday after the consumer price index for the month of September showed a slightly larger-than-expected increase in inflation despite the aggressive rate hikes the Federal Reserve has brought into play to combat the price increases.
“Markets don’t tend to embrace high inflation numbers because they usually lead to further rate hikes,” said Steve McClurg, chief investment officer at Valkyrie investments. “Given what we know about Powell’s stated goal right now, and the fact that we are in what appears to be a deep recession, it makes sense that we’d be down today.”
“We firmly believe that markets still have not yet reached a bottom, and that there’s still likely another 10-15 percent leg down for digital assets, and even more for equities,” he added.
Crypto equities fell with digital asset prices. Coinbase lost about 11%, Microstrategy dropped 8% and Silvergate Bank declined about 7%.