Bitcoin declined 5.7% over the past week as renewed inflation concerns prompted a $1 billion outflow from Bitcoin ETFs, ending a six-week streak of inflows, according to analysis from Wintermute. U.S. consumer inflation accelerated to 3.8%, while 10-year Treasury yields surged to 4.58%—the highest level since September 2025—fueling expectations of a Federal Reserve rate hike in December that now stands at 44% probability.
Ethereum underperformed more severely, dropping 10.2% in the same period. The recent cryptocurrency rally was primarily driven by short-squeeze dynamics and leveraged long positions rather than genuine spot market demand, analysts noted. Meanwhile, Brent crude climbed 8.6% last week amid escalating tensions around the Strait of Hormuz, signaling that inflation pressures may no longer be transitory but rather entrenched in the new macroeconomic environment.
The appointment of Kevin Warsh as incoming Federal Reserve chair—characterized as more hawkish than his predecessor—has shifted market expectations dramatically. In just five trading days, investors completely abandoned prior expectations for rate cuts in 2026, pivoting instead toward a higher-for-longer rate environment. For Bitcoin, the critical support zone now sits between $76,000 and $78,000; a breakdown below $75,000 could accelerate a decline toward $70,000.