Crypto Funds Shed $434M as U.S. Inflation Data Sours Sentiment

The latest CoinShares market update highlights that annual inflation reached 3.7% in September, surpassing the 3.6% forecast. This persistent price pressure, compounded by a 0.8% jump in retail sales—well above the projected 0.3%—has bolstered the case for a more restrictive monetary environment. While high fuel costs drove much of the retail growth, the data has fundamentally altered the risk appetite for digital assets like Bitcoin.

CoinShares noted that the recent withdrawals do not necessarily signal a long-term bearish shift, but rather a tactical retreat in the face of elevated borrowing costs. With Treasury yields and interest-bearing assets offering more attractive returns, capital is flowing away from risk-sensitive crypto products. Traders are now pricing in a higher probability of further tightening, with prediction markets like Polymarket assigning a 25% chance of a rate hike at the upcoming Federal Reserve meeting, even as a pause remains the primary expectation.