Bitcoin falls to start the week as investors look ahead to inflation data

Bitcoin fell to its lowest level in over a week on Monday as investors continued to digest strong jobs data from Friday that pushed risk assets including cryptocurrencies even deeper into the red.

The largest cryptocurrency by market cap was down about 1.5% to $19,178.43, according to Coin Metrics. Ether was also down 1%, to $1,304.82.

“Today there appears to be some unease and tapering across all markets as we approach Thursday’s CPI release,” said Riyad Carey, a research analyst at Kaiko. “Bitcoin is moving closely with stocks and I expect that to continue since there haven’t been many crypto-specific catalysts in recent weeks. I also expect significant volatility on Thursday, with a move up or down depending on the inflation number.”

On Thursday, the Bureau of Labor Statistics publishes September’s consumer price index. Economists polled by Dow Jones expect the headline CPI to show a 0.3% monthly increase and an annual increase of 8.1%. Investors are watching these updates closely for clues about the Federal Reserve’s next move in the fight to bring down inflation.

“We think it’s a building narrative that central banks are starting to make policy mistakes,” James Butterfill, head of research at CoinShares, told CNBC, citing Bank of England interventions, concerns about the Fed’s rate plan and fearful interest rate hikes. The European Central Bank.

“Several of our clients have made a point that they don’t want to buy bitcoin right now, but as soon as the Fed swings, they will add to positions,” he added. “Key data points to watch this week will be the CPI data on Wednesday and the FOMC minutes, a hint of dovishness is likely to be supportive for crypto assets.”

Despite the anxiety hanging over investors, cryptocurrency volatility has been uncharacteristically low in recent weeks, although the correlation with stocks remains positive.

Bitcoin ended Sunday inside the $19,000 level for the fourth consecutive Sunday, according to Kaiko. The high volatility regime that the crypto market has been through since the big June crash may be coming to an end, based on hourly returns, the data provider said in a research note on Monday.

Bitcoin and ether’s hourly returns rose 3% to 5% during the crypto-credit crisis, but have since fallen back to around 1% to 2%, the note said.