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 analysis points to the Consumer Price Index (CPI) report released on November 10, which showed a 0.4% month-over-month increase in headline consumer prices and a 0.3% rise in core CPI. These figures heightened expectations of a Fed rate hike, with market pricing for a 25-basis-point increase in December surpassing 90%. Fed Governor Christopher Waller's comments further reinforced these expectations.
Bitcoin's price 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. Institutional investors also exited, with US spot Bitcoin ETFs recording net outflows of $1.44 billion to $1.88 billion in early November.
The Binance hack, which occurred on October 29 and involved the loss of approximately $6.3 billion in assets, including 18,270 BTC, had a brief impact on prices. However, Coinbase Institutional believes its effect faded quickly, and broader macroeconomic factors took over. The analysis aligns with a growing view that Bitcoin's price is now more influenced by interest rates, inflation, and dollar strength than by individual industry events.
Key variables to monitor moving forward include upcoming inflation readings, the Fed's December decision, ETF flow trends, and leverage levels in derivatives markets. According to Coinbase Institutional, these factors will likely have a greater impact on Bitcoin's next move than any single exchange incident.