The largest cryptocurrency by market cap fell about 1.3% to $19,213.00, according to Coin Metrics. Earlier in the day, it fell as low as $19,116.43. Ether fell about 1% to $1,307.58, after falling as low as $1,297.07.
“Today there appears to be some jitters and derisking across all markets as we approach Thursday’s CPI release,” said Riyad Carey, a research analyst at Kaiko. “Bitcoin is moving close to equities, and I expect that to continue as there haven’t been many crypto-specific catalysts in recent weeks. I also expect significant volatility on Thursday, with a move up or down depending on the inflation number.”
On Thursday, the Bureau of Labor Statistics will publish September’s consumer price index. Economists surveyed by Dow Jones expect headline CPI to show a monthly increase of 0.3% and an annual increase of 8.1%. Investors are watching these updates closely for clues about the Federal Reserve’s next move in its fight to bring down inflation.
“We think there’s a building narrative that central banks are starting to make policy mistakes,” James Butterfill, head of research at CoinShares, told CNBC, citing Bank of England interventions, concerns about the Fed point plan and fearful interest rate hikes. The European Central Bank.
Cryptocurrencies have been under tremendous pressure following the collapse of a so-called stablecoin called terraUSD.
Umit Turhan Coskun | Nurphoto via Getty Images
“Several of our clients have indicated that they do not want to buy bitcoin right now, but as soon as the Fed pivots, they will add to positions,” he added. “Key data points to watch out for this week will be the CPI data beat/miss on Wednesday and the FOMC minutes, a hint of dovishness likely to be supportive for crypto assets.”
Despite the anxiety hanging over investors, cryptocurrency volatility has been uncharacteristically low in recent weeks, although its correlation with stocks remains positive.
Bitcoin ended Sunday inside the $19,000 level for the fourth straight Sunday, according to Kaiko. The high volatility regime endured by the crypto market since its big crash in June may be coming to an end, based on hourly returns, the data provider said in a research note on Monday.
Bitcoin and ether’s hourly returns rose 3% to 5% during the crypto credit crisis, but have since returned to around 1% to 2%, the note said.