Uniswap's UNI token was the only CoinDesk 20 constituent in the green over the past 24 hours.
Bitcoin (BTC) dropped below the key level of $59,000 on Thursday evening as new data showed U.S. inflation reaccelerated in September, while the Biden administration continued its crypto crackdown with a lawsuit against digital asset market maker Cumberland DRW.
After falling as low as $58,700 on Thursday morning, BTC recovered slightly but remained down around 4% over the past 24 hours. The price has now returned to levels last seen after the U.S. Federal Reserve slashed its benchmark interest rate by 50 basis points in mid-September.
Crypto began the day on a weak foot after the U.S. Consumer Price Index report showed an unexpected re-acceleration of inflation in September. The news drove a stake through any idea that the Fed could cut interest rates another 50 basis points in November, with some market participants now speculating that the U.S. central bank might even decide to pause its rate-cutting cycle at that meeting.
"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," Quinn Thompson, founder of hedge fund Lekker Capital, said in a Telegram message. "Mix in [Atlanta Fed President] Bostic's hawkish comments today regarding a potential pause and that's the tinder to run the levered traders' stops."
Indeed, the sell-off liquidated some $147 million of leveraged long positions betting on higher prices across crypto derivatives markets, CoinGlass data shows.
Prices dropped even lower during afternoon hours following news that the U.S. Securities and Exchange Commission (SEC) had filed a lawsuit against Cumberland, a major market maker in the digital asset space. The SEC alleged that DRW, a quantitative trading firm, traded crypto assets that were sold as securities without registering as a securities dealer.
Cumberland pushed back against the lawsuit in an X post, saying that "we are not making any changes to our business operations or the assets in which we provide liquidity as a result of this action by the SEC."
The SEC lawsuit was only the latest regulatory action by the U.S. government against crytpo this week. On Wednesday, the Department of Justice charged four market makers and more than a dozen individuals over market manipulation charges. Also Wednesday, SEC Chair Gary Gensler was very dismissive about the idea that bitcoin or crypto might catch on in any sort of significant way as a means of payment. He called out the crypto industry for being filled with "fraudsters," and asserted that the "leading lights" of the sector were either in jail or soon to be on their way behind bars.
"There's going to be a lot of noise between now and [the U.S.] election [in November] and it's likely bitcoin is just range bound until then," Lekker's Thompson added.
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