Bitcoin climbed above $86,000 twice on Tuesday, with the price reaching a session high of $86,450, as regulatory developments from federal agencies supported momentum in the market. The cryptocurrency's market capitalization approached $1.72 trillion as it consolidated above $86,200 by midday trading.
Regulatory Developments Drive Price Action
The price rallies followed announcements from the Commodity Futures Trading Commission regarding cryptocurrency regulation and a Securities and Exchange Commission proposal enabling advisers and regulated funds to custody crypto assets. The CFTC's advance notice of proposed rulemaking drew attention for its interpretation of existing commodity law provisions, with some legal observers noting a creative reading of the Commodity Exchange Act's Section 2(c)(2)(D).
The regulatory framework could potentially cover retail crypto spot trades offered with leverage, even when customers do not utilize the leverage option. However, observers have raised questions about the proposal's clarity regarding bankruptcy protections for customer assets.
Market Volatility and Liquidations
Bitcoin's Tuesday price action followed a sell-off earlier in the week that briefly pushed the price below $85,000. The tight price action reduced liquidations substantially, with total bitcoin position liquidations falling to approximately $30 million on Tuesday from $109 million 24 hours earlier.
By 1:15 p.m. EST, Bitcoin had pulled back to around $85,500. The price movement kept the cryptocurrency in positive territory nearly six days after entering October trading at approximately $83,700.
Inflation Data Ahead
Market analysts expect upcoming consumer price index inflation data to influence near-term price direction. According to Bitfinex research, bitcoin is expected to trade between $84,000 and $87,722 through the week absent a significant breakout. Analysts noted that core CPI data showing signs of slowing inflation could prove supportive for cryptocurrency prices, while steady or rising core inflation could strengthen expectations for a December Federal Reserve rate increase.
