what happened? Cryptocurrencies plunge! Bitcoin falls below 60,000 mark again

An unexpected rise in U.S. inflation in September and the resulting regulatory actions dealt a double whammy to the cryptocurrency market. The inflation rate rose by 0.2%, exceeding expectations, triggering market concerns that the Federal Reserve may suspend interest rate cuts, and comments from Atlanta Fed President Raphael Bostic exacerbated market uneasiness.

In addition, the U.S. Securities and Exchange Commission (SEC) lawsuits against Crypto.com and Cumberland DRW, as well as crackdowns on market manipulation, have further increased market volatility. Bitcoin was down about 4%, with prices back at $59,000, while other cryptocurrencies also underperformed. As of press time, Bitcoin has fallen 1.27% in the past 24 hours to US$60,092.88 per coin.

Despite the clear short-term bearish signals, some analysts remain optimistic about Bitcoin's long-term trajectory, predicting that the price could reach $135,000 within a year. Market participants are expecting a trend reversal before the end of October, while a potential pullback below $50,000 will also provide buying opportunities for long-term investors.

Rising CPI dampens interest rate cut expectations, sending cryptocurrencies down

After the U.S. Department of Labor released a higher-than-expected consumer price index (CPI) for September, market expectations for the Federal Reserve to continue cutting interest rates in November were hit. Atlanta Fed President Raphael Bostic said he is willing to pause interest rate cuts at next month's meeting if economic data supports it. Bostic mentioned in the interview that volatility in economic indicators means the Fed should pause cutting interest rates in November to wait patiently and watch the data develop.

This increase in inflation data, coupled with an increase in weekly jobless claims, has led to increased market volatility. Still, Bostic remains open to resuming rate cuts later this year, arguing that current economic conditions are heading towards neutral and that a 25 basis point cut will not have a significant impact.

However, the release of inflation data had an immediate impact on the cryptocurrency market. Bitcoin (BTC) fell around 4% in U.S. afternoon trading, with prices back down to $59,000, the lowest level since the Federal Reserve unexpectedly cut interest rates by 50 basis points in mid-September. Other cryptocurrencies such as altcoins, ethereum (ETH) and the broad cryptocurrency benchmark CoinDesk 20 Index also fell, with Ethereum down 3.5% and the CoinDesk 20 Index down nearly 3%.

BTC price source：coinmarket cap

In this regard, Quinn Thompson, founder of the hedge fund Lekker Capital, pointed out that due to the rise in CPI and oil prices caused by tensions in the Middle East, the market is worried that the Federal Reserve will not cut interest rates as sharply as previously expected. Atlanta Fed President Bostic's tough words about a possible pause in interest rate cuts could be a trigger for leveraged traders to cut their losses. In fact, the market sell-off resulted in the liquidation of approximately $147 million in leveraged long positions.

Related reading：The Fed's 50 basis point interest rate cut caused Bitcoin to break through $60,000. Is Bitcoin returning to $70,000 soon?

SEC cryptocurrency regulation upgrades, many companies have been charged

At the same time, the U.S. Securities and Exchange Commission (SEC)’s regulatory actions on the cryptocurrency market are also continuing. Crypto.com received the SEC’s Wells Notice and filed a lawsuit to defend itself. The SEC intends to sue the digital asset exchange, accusing it of operating as an unregistered broker-dealer and securities clearing agency. Kris Marszalek, CEO of Crypto.com, said on Twitter that the SEC’s unauthorized overreach and illegal rulemaking in cryptocurrency must stop.

In addition, the SEC also accused Cumberland DRW of acting as an unregistered dealer in more than $2 billion in crypto assets. The lawsuit has reignited concerns about the challenging regulatory environment for U.S. cryptocurrency companies. In its rebuttal, Cumberland said it would not change its business operations or assets that provide liquidity as a result of the SEC's action.

The SEC’s lawsuit is just one of the latest regulatory actions taken by the U.S. government against cryptocurrencies this week. On Wednesday, the Justice Department indicted four market makers and more than a dozen individuals on charges of market manipulation. SEC Chairman Gary Gensler is skeptical of the popularity of Bitcoin or cryptocurrencies as a means of payment, calling the cryptocurrency industry rife with “scammers” and claiming that the industry’s “leading figures” are either in jail or will soon be in jail .

Lekker's Thompson added that there will be a lot of noise between now and the U.S. election in November, and Bitcoin is likely to remain range-bound until then.

Related reading：Rimar Capital Settles with SEC Over Alleged AI Fraud Scheme

Is Bitcoin Price About to Drop Below $50,000?

The Bitcoin market is currently going through a volatile period, with the price potentially falling below the psychologically important $50,000 mark. Analysts attribute this potential decline to changing liquidity conditions and some troubling technical signals.

First, does the reduction in liquidity herald the arrival of a market adjustment? Analyst Cole Garner took to the social media platform to express his concerns about current market conditions. He warned that liquidity on the Bitcoin network is tightening, which could be a sign of imminent investor capitulation. Ghana is paying particular attention to the Liquid Vision Index, which measures the overall level of liquidity provided by the central bank. While the index may signal future buying opportunities, it may experience a final dip before the market rebounds.

Another issue of concern is the shrinking supply of stablecoins, especially Tether (USDT) and USD Coin (USDC). A reduction in supply could limit the market’s purchasing power, putting downward pressure on Bitcoin’s price.

However, despite these short-term bearish signals, Ghana remains optimistic about Bitcoin’s long-term prospects. He pointed out that the overall structure of the market remains bullish, and Bitcoin has also hit new highs in succession recently. Some market participants are expecting to see a reversal of trend before the end of October, as this is traditionally a better month for Bitcoin. In addition, external factors such as China's possible economic stimulus plan may trigger a new round of capital inflows into the cryptocurrency market.

Veteran trader Peter Brandt further predicted that if Bitcoin can maintain key support levels, its price will reach $135,000 within a year.

Currently, Bitcoin is trading around $60,000, with the market nervously awaiting a possible price correction. A pullback below $50,000 could provide an attractive buying opportunity for long-term investors. Against this backdrop of uncertainty, it is more important than ever for all investors to conduct careful and in-depth market analysis.