Bitcoin’s $100,000 dream slips away as $939 million crypto wipeout pushes traders toward $78,000

Bitcoin registered an intraday low of $79,730 before recovering to around $82,000 as surging US wholesale inflation intensified a cryptocurrency selloff that triggered nearly $940 million in liquidations.

This price action extended losses as stronger-than-expected inflation data raised concerns about another interest rate hike by the Federal Reserve.

According to CoinGlass, 176,506 traders were liquidated during the period, totaling $939.24 million. The largest single liquidation occurred on Binance, where traders closed a BTC-USDT position worth $12 million.

The selling followed a Labor Department report showing US producer prices jumped 1.3% in September, the biggest monthly increase since March 2022. Annual wholesale inflation accelerated to 6.3%, its highest level in nearly four years.

Core producer prices, excluding food and energy, rose 0.7% against expectations of 0.3%, taking the annual rate to 5%. The figures followed Wednesday's consumer inflation reading of 3.7%, indicating that price pressures were spreading beyond the energy market.

Ricky Ho, chief investment officer of a single-family office, said the core reading was particularly concerning because it suggested businesses were facing broader cost increases that could eventually reach consumers.

Energy prices surged 10.8% in September, raising transportation, manufacturing and distribution expenses. Ho warned that businesses must either absorb those increases through lower profit margins or pass them on to customers, potentially prolonging inflation and forcing the Fed to maintain restrictive monetary policy.

The Kobeissi Letter also highlighted the scale of the inflation surprise, noting that the monthly headline PPI increase more than doubled expectations.

Yet financial markets have responded in a seemingly contradictory way.

The benchmark 10-year US Treasury yield fell to around 5.06% despite the inflation surprise, as investors moved into government bonds amid a deepening technology-stock selloff.

Mohamed El-Erian, chief economic adviser at Allianz, attributed the decline partly to investors seeking safety as previously high-flying technology stocks came under pressure.

He also pointed to growing concerns about the resilience of technology investment, a key driver of US economic growth, along with emerging credit stress and elevated borrowing costs.

The divergence suggests investors are increasingly balancing inflation risks against the possibility that weakness in technology stocks could spill into the broader economy.

That tension has complicated expectations for the Fed's Oct. 27-28 meeting.