Following the August U.S inflation report which revealed that prices grew faster than expected, Bitcoin and crypto assets greatly fell in value on Tuesday, on high indication that the Federal Reserve will likely raise interest rates by another 0.75% the following week.
The crypto market is back to below a trillion-dollar market value as about $89 billion worth of crypto got evaporated.
About 97k traders have liquidated positions totalling more than $357 million in the crypto derivatives market today, with long BTC positions accounting for about 75% of those transactions.
The leading cryptocurrency recently traded just around $20,300, down more than 7% from the previous day, and dropped significantly for the day.
Bitcoin fell more than 5% in the hour following the CPI release and continued to fall, from where it had been hovering around $22,500 shortly before the report was released.
- Ether, the second-largest cryptocurrency by market value, followed a similar pattern as inflation worries overrode Merge exuberance and was trading under $1,600, down roughly 6% from the previous day.
- Thursday is the scheduled day for The Merge, which will convert Ethereum’s blockchain from a slower, more energy-intensive proof-of-work protocol to a proof-of-stake one.
- However, recent ETH activity, even before the dismal CPI, has suggested that the biggest price increases have already taken place.
A number of market pundits anticipate that since risk asset sentiment may be so negative right now that there may be little opportunity for markets to rise over this year as the prospect of high inflation provides the Fed more room to raise rates faster than most investors are assuming.
