Hotter-than-expected September inflation data triggered a sell-off in stocks and crypto. Bitcoin fell below its 50-day moving average to a low of $80.4K, while buyers returned as European trading began.
September's 3.7% annual CPI increase, up from 3.4% in August, reignited fears that inflation is rising again. Core CPI also rose to 2.6% year over year, above expectations and up from 2.4% the month prior.
Bitcoin slides below its 50-day average
Bitcoin fell on Wednesday after the data exceeded forecasts. Even before the release, the leading cryptocurrency was sold off as it tried to climb above $84K.
The slide pushed BTC below its 50-day moving average and reached a low of $80.4K. As trading began in Europe, buyers regained the balance and the price rose closer to the signal line at $81.3K.
The wider crypto market also declined. Market capitalisation fell to $2.72T (−2.8%), its lowest level in nearly a month, and only six of the top 100 coins were rising. The sentiment index dropped to 53, a new low since 17 September.
Sticky inflation spreads beyond energy
Gasoline jumped 9.1% in September alone, while shelter, airline fares, medical care and apparel also moved higher. Analysts at the Kobeissi Letter noted that US inflation has stayed above the Federal Reserve's 2% target for 67 consecutive months.
Persistent inflation gives the central bank less room to lower rates and can even force it to raise them further, as it did at the September FOMC meeting. Higher rates also hurt highly valued growth stocks, because future earnings are discounted at a higher rate.
Stocks reacted sharply. The S&P 500 lost over 1% and the Nasdaq fell almost 2%, and the Kobeissi Letter estimated that roughly $800 billion in S&P 500 market capitalization disappeared during the session.
Crypto's outlook carries its own warning. Wintermute warns the decline may continue because of reduced investment in crypto ETFs and high yields on US government bonds.
Sources: CryptoPotato, ActionForex
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