Inflation bombshell has markets harried

Inflation is through the roof, to which as anyone looking to rent a car or guzzle a quart of milk can attest. Officials and large investors at least (at long last) took note.

Year-over-year inflation, as measured by the Consumer Price Index, just jumped an eyeball-straining 5.4%, its highest level in 13 years, and well out of synch with the 2% target set by the U.S. Federal Reserve. The Fed, disinclined to show much concern, is telegraphing a “nothing-to-see-here” message to the effect that, like a summer fling, this is all transitory, as, post-pandemic, economies reopen, testing supply chains.

Bitcoin enthusiasts have long argued the digital currency has the potential to act as a hedge against inflation, so some investors may take the alarming CPI data as a buy signal (CoinDesk).

Inflation-rattled traders appeared to be switching to risk-off, creating an intensifying conversation about loose-money mania, with an unsettling overlay of data that suggests Covid-19 cases are back on the rise in the U.S.

The recipe for consternation has put pressure on equities markets, and the worries spilled over to the digital money domain. Crypto's total market capitalization declined by 4.5% to about $1.4 trillion as of earlier today. For context/comfort, consider the recent low tide of $1.3 trillion hit 22 days ago.

On Tuesday into Wednesday, Bitcoin keeled over, falling below $32,000; Ethereum, likewise, is sinking, unable to cling to $2,000.

However, the most severe flailing was spotted as of 6 a.m. (EST). One last check just before 9 a.m. showed the Big Two battling back. BTC had jumped back above $32K. ETH was $1,950, flat over one hour.

Should I stay or should I go? That's what newly unshackled Grayscale Bitcoin Trust investors are asking themselves starting today.

Six-month-old GBT-share handcuffs will be shed through the end of the month, with the largest potential liberation parade happening early next week.

The GBT share unlock could crash BTC to sub-$25K levels, JPMorgan analysts predicted (Coingape).

For crypto, rising inflation (which would seem to bode well) has been no match for rising regulatory pressure.

Digital assets can't shake the risk-asset label, leaving them hitched to a wobbly-wheeled stock market wagon train, circling and spooked by higher-than-expected inflation. Bears seizing control, a Fed-created Frankenstein set loose, Bank of America revenue dented – there's some frigid air blowing through the canyons Wall Street. And yet there may yet be a few more twists in the story surrounding how the largest crypto asset does or does not correlate with more traditional markets, and whether any of it even makes any sense, whatsoever.

"Bitcoin marches to its own drummer, and neither inflation, nor its expected trajectory in the years ahead, sets the beat," Fortune said. "Fans are struggling to explain Bitcoin's crazy rhythm."

Japanese authorities busted an alleged scheme involving four men and a ploy to tempt crypto investors to part with their yen based on the appeal of artificial intelligence. Cointelegraph, citing Japanese newspaper Asahi Shimbun, said the scam was dubbed the "Oz Project." Targets, some 20,000 of them, and stung for a combined 6 billion yen, couldn't seem to resist the lure of crypto returns delivered via an AI-based system; investors were told they would get back 100% of their initial investment, plus assured profits.