Here are some potential reasons why Bitcoin price is dropping today.
Fed governor says further interest rate hikes likely needed to fight inflation
US Federal Reserve (FED) officials said monetary policy will need to stay restrictive for some time to bring inflation back to the 2% target.
“I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way,” said the Federal Reserve Gov. Michelle Bowman.
Despite considerable progress, she said, “Inflation continues to be too high, and I expect it will likely be appropriate for the committee to raise rates further and hold them at a restrictive level for some time.”
Inflation, measured by consumer price index (CPI), fell from 9% last year to 3.7% in August, partly due to the Federal Reserve raising interest rates by 5.25 percentage points over the past 18 months.
Binance was hit with a class action lawsuit
It is not really but this could be a reason why Bitcoin is down today.
Binance and founder CZ are facing a class action lawsuit related to allegations of market manipulation and unfair competition harming its competitor FTX.
Bloomberg reported that Nir Lahav, an investor in California, along with many others, on October 2, filed a lawsuit against Binance in the District Court of Northern California.
At issue are posts made by Zhao on Twitter X in early November on the eve of FTX’s collapse. The posts were made in conjunction with the decision by the defendants to liquidate their holdings in the FTX utility token, FTT, on Nov 6. The plaintiffs estimated that Binance owned up to 5% of all FTT tokens.
The following day, Zhao stated in a Twitter post that Binance had signed a letter of intent to acquire FTX, but backed out of that deal one day later. The suit alleges that Zhao’s proposal to acquire FTX was not made in good faith and that the episode would “ultimately lead” to the collapse of FTX.
“Zhao’s tweet resulted in FTT price declining from US 23.1510 to US 3.1468. This significant drop plummeted FTX Entities into bankruptcy without giving an opportunity or chance to FTX Entities’ executives and board of directors a chance to salvage the situation and put in safe guards to protect its clients and end-users.”
The plaintiffs claim that this is a deliberate action to eliminate competitors and strengthen Binance’s position in the market. The investor group is gathering evidence of financial losses, court costs and expects thousands of people to join their class action lawsuit.