Crypto Rally Unwinds as Traders Brace for Hawkish Warsh Fed, US Inflation Data
The relief rally that lifted crypto off last week's lows is unwinding alongside tech stocks and gold, with traders bracing for a US inflation print and a Warsh Fed that may stay hawkish. Bitcoin traded at $61,233 on Wednesday, down 3% over 24 hours and 6.9% on the week, while gold fell 2% to below $4,200 an ounce. Ether dropped 3.4% to $1,625, and solana fell 4.1% to $64.24. South Korea's Kospi tumbled 6.3%, leading a 2.5% drop in MSCI's broad Asia-Pacific equity gauge. The market is betting on higher interest rates, punishing assets like bitcoin and crypto that don't pay yield. A hot US inflation reading could harden the case for new Federal Reserve Chair Kevin Warsh to keep rates higher for longer, draining liquidity from assets that ran hardest on cheap money. The bounce into Monday was a short squeeze, not fresh buying, as over $500 million in bearish bets were liquidated. Some market watchers say spot demand never showed up behind it. Watch whether bitcoin can hold a bid through the inflation print or keeps trading tick-for-tick with the Nasdaq.
Key facts
- Bitcoin down 3% in 24 hours to $61,233, gold falls 2% below $4,200.
- Ether drops 3.4% to $1,625, solana falls 4.1% to $64.24.
- Monday's bounce was a short squeeze with over $500M bearish bets liquidated.
- Traders brace for US inflation data that could strengthen hawkish Fed stance.
- Spot demand remains absent, leading to fragile rally as per sFOX analyst.