Market stymied

The government's just-released inflation report (for September) ran a little sticky, vexing risk-asset investors. U.S. stocks, which had soared to record heights on Wednesday, showed signs (in early futures trading) of an impending slouch.

Bitcoin, as of 9:15 a.m. (EST), slipped below $61K, this after slipping below $62K yesterday.

Crypto traders spent the morning wrestling with anxiety over the strengthening dollar which seemed to foretell that the consumer price index (CPI) might well spoil the narrative that inflation was cooling. At 8:30 a.m. (EST) came news that the CPI indeed ticked up 0.2% last month, which is a smidgen more than expected, meaning, perhaps, inflation might be more persistent than the Fed thought. And so, rate cut scenarios are clouded. Still, it does appear as if a pair of 25-basis-point rate cuts remain in the cards.

Meanwhile, in decentralized finance, a DEX stalwart, Uniswap (UNI), announced plans to launch an Ethereum layer-2 network, Unichain. Far and away, UNI is outrunning the rest of the big-cap crew over the past 24 hours. UNI, 20th-largest digital asset, surged 12% to cross above $8 for the first time since July.

Talk of another jumbo rate cut has grown fainter and now there's even a dreadful notion of a possible pause when the Fed next convenes in November. And all because the CPI rose 0.2% in September.

"The data reinforces the notion that not only will the Fed not cut rates 50 basis points in November, but might chose to not trim rates at all," CoinDesk said.

Bitcoin has been weighed down by macro uncertainty and ETF struggles over the past week-and-a-half or so; spot BTC dipped a bit more after the inflation numbers came out.

Rates still seem to be set to fall, perhaps just not as quickly as investors only weeks ago had anticipated. Wider gains could be in store for the crypto market at large, as the central bank's shearing operation plays out, with the possible stunting of at least one uptrend — the BTC dominance rate. 

SwissOne Capital, a crypto asset manager, points to the second half of 2019 when an easing cycle began right as BTC's dominance had peaked above 70%. BTC's dominance subsequently, steadily, sank lower, reaching nearly 40% in late 2021, a time of pandemic-era-bred monetary looseness.

"In finance ... we play near to the line," said Gary Gensler, speaking yesterday at the NYU School of Law.

Which is why sometimes enforcement actions are needed to "bring people back to the right side."

Gensler used the forum to throw a jab at a litany of crypto luminaries who wound up behind bars or are awaiting extradition.

His remarks, that the industry remained rife with "fraudsters, grifters and scams," came right as the U.S. Department of Justice announced that after a two-year probe it had charged a quartet of crypto trading firms (billing themselves as legitimate "market makers") for secretly offering market manipulation services on the side. 

According to CoinDesk, citing charging documents, the firms are Gotbit, CLS Global, MyTrade and ZM Quant. One of the coins that these firms allegedly "wash traded," as part of a sneaky bid to artificially inflate volume, was called Robo Inu, a micro-cap asset, below $1M in market capitalization, per CoinGecko. 

Oddly (or fittingly) enough, the token briefly pumped on Wednesday after the indictment was unsealed.

"It's unlikely this stuff is going to be a currency," Gensler said, referring generally to wider crypto. "It's going to have to show its value through disclosure, through use."

Meanwhile, a hemisphere (and a rhetorical world) away, BlackRock's Jay Jacobs, head of thematic and active ETFs, delivering remarks at a digital assets conference in Brazil, said that blockchain technology and digital currencies are emerging as the singular technological juggernaut of our times. He pointed to adoption rates that have even surpassed the historical take-up marks set by the internet and mobile phones.

“This is one of the fastest-growing technologies we’ve seen in the last few years,” he said.

Technopedia summarized Jacobs' explanation as for why there's been such speedy acceleration, saying that it's partly because of the unprecedented interconnectedness of the economy in the digital age and that it also owes to consumption patterns shifting online via activities like shopping, streaming and gaming.