Originally published on: October 10, 2024
Bitcoin recently saw a 5.3% decline, hitting a three-week low of $58,900. This drop coincided with higher-than-expected consumer inflation data in the United States, signaling concerns about the Federal Reserve’s interest rate policy.
Investors are worried about a possible recession as consumer prices rise while the economy stagnates, a phenomenon known as “stagflation.” Additionally, rising jobless claims in the US have raised fears of a broader economic impact.
The correlation between Bitcoin and the S&P 500 is at a high of 88%, indicating a potential stock market correction. Traders are becoming less optimistic, as seen through outflows from US spot Bitcoin ETFs and weakening derivatives metrics.
The recent lawsuit against market maker Cumberland DRW by the SEC has added to the bearish sentiment surrounding Bitcoin. This, coupled with a drop in Bitcoin futures metrics below a key threshold, suggests a shift in traders’ sentiment.
Despite these indicators, the options market shows that large entities may have closed leveraged long positions, leading to a temporary decline in Bitcoin prices. Derivatives traders do not seem to be anticipating a significant drop in the near future.
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