Bitcoin is trading weakly below $80,000, as surging global oil prices and rising U.S. producer prices fueled concerns about an interest rate increase and dampened investor sentiment.
Bitcoin traded at $76,621.98 as of 8:19 a.m. on the 11th, down 1.91% from the previous day, according to CoinMarketCap, a global cryptocurrency data site. At the same time, Ethereum fell 0.91% to $2,438.32, BNB slipped 1.04% to $712.49 and XRP dropped 3.94% to $1.33.
The domestic market was also weak. Bitcoin traded at 104.842 million won, down 0.68% from the previous day, on Bithumb at the same time. Ethereum rose 0.15% to 3.338 million won, while XRP fell 1.56% to 1,829 won.
Bitcoin slid as much as 2.1% overnight to $76,663.54. Bloomberg said risk appetite weakened as global oil prices surged on heightened tensions in the Middle East and U.S. inflation data failed to dislodge expectations that the Federal Reserve will raise rates.
Bitcoin's losses widened in particular after the release of the U.S. producer price index for August. The index rose 0.4% from the previous month and 5.4% from a year earlier, according to the Labor Department. Energy prices jumped 4.2% from the previous month, and diesel prices soared 24.1%. The gains reflected higher global oil prices driven by continuing tensions between the United States and Iran.
With price pressures persisting, caution over a rate increase has continued ahead of the Federal Open Market Committee meeting on the 15th and 16th. The probability of a 0.25 percentage point rate increase in September priced into rate futures markets climbed to about 70% after the PPI release, according to the CME FedWatch tool.
Rising global oil prices and U.S. Treasury yields also weighed on risk appetite. West Texas Intermediate crude for October delivery settled at $102.48 a barrel on the 10th, up 6.69% from the previous session, while November Brent crude rose 6.34% to $107.63. The 10-year U.S. Treasury yield topped 4.95% during the session, and the 30-year yield closed at 5.360%.
Still, analysts said it is too early to read the decline as the start of a new downturn for bitcoin. The cryptocurrency has traded largely between $60,000 and $80,000 since early February. Bloomberg said the recent decline also falls within that range, but noted that bitcoin's repeated failure to hold above $80,000 shows it is struggling to extend its recent rebound.
Market participants are watching the U.S. consumer price index for August, due tonight. The reading could shift market expectations for the Fed's rate decision at next week's FOMC meeting. If inflation comes in stronger than expected, concerns about a rate increase could grow and add further pressure on bitcoin and other cryptocurrencies.
Another variable for the cryptocurrency market is U.S. regulatory legislation. The Senate is set to hold a procedural vote on the CLARITY Act, a bill on cryptocurrency market structure, on the 15th. The vote will not decide the bill's final passage but serves as a procedural gateway to full debate, with 60 votes required to end debate. Its prospects remain uncertain, as some Democrats and some Republicans have raised concerns over anti-money-laundering safeguards and the potential impact on the banking system.
The Fear and Greed Index from Alternative.me, a cryptocurrency data analytics firm, rose 3 points from the previous day to 69, in "greed" territory. A reading closer to zero indicates weaker investor sentiment, while a reading closer to 100 signals an overheated market.
