Bitcoin's recent decline has been widely attributed to the Binance hack, but Coinbase Institutional argues that shifting Federal Reserve interest rate expectations played a bigger role. The pivot came with the November 10 Consumer Price Index report, which showed headline consumer prices rising 0.4% month-over-month and core CPI increasing 0.3%. These figures pushed market expectations for a 25-basis-point rate hike in December above 90%, according to the CME FedWatch tool.
Bitcoin dropped below $70,000 after the CPI release, reaching levels last seen in mid-August. By November 13, it was trading between $67,770 and $68,500. The decline was exacerbated by liquidations of leveraged long positions, totaling around $1.3 billion to $1.6 billion during the November 13 drop, with overall liquidations surpassing $1.6 billion.
Institutional investors also exited positions, with US spot Bitcoin ETFs recording net outflows of $1.44 billion to $1.88 billion in early November. While the Binance hack, which involved the loss of approximately $6.3 billion in assets including 18,270 BTC, had brief price implications, Coinbase Institutional believes broader macroeconomic factors drove the downturn.
The analysis aligns with the view that Bitcoin now trades more on interest rates, inflation, and dollar strength than on isolated industry incidents. Key variables to monitor include upcoming inflation readings, the Fed's December decision, ETF flow trends, and leverage levels in derivatives markets.