In a stark reversal from the reaction to the Federal Reserve’s decision, Bitcoin and many altcoins plunged along with treasuries as traders are concerned that officials may struggle to control inflation amid the threat of recession.
A drop of 11% is the biggest intraday decline since January 21 for the largest digital currency by market value.
The price of ether dropped by as much as 9%. Following the U.S. central bank’s rate hike Wednesday, Avalanche and Solana were down as much as 15% and 11%, respectively.
A liquidation cascade appears to have occurred at the same time as the crash. In a single day, crypto liquidations totalled over $407 million, including $192 million in losses from Bitcoin. 103,889 traders have been liquidated for the day,
One of the largest liquidations happened on Okex – $3.74 million.
Investors are uneasy about the prospect of stagflation, with doubts that policymakers could curb runaway prices
Fed Chair, Jerome Powell initially surprised crypto traders by rejecting a 75 basis-point hike in June.
Even so, the road ahead is rocky, with pivotal economic data and global developments that might cause the central bank to rethink its approach. According to forecasts, Today’s jobs report at the world’s biggest economy will show solid payroll growth and wages holding at high levels, maintaining inflationary pressures.
Bitcoin has yet to break out beyond its highs at the beginning of the year in this higher-rate environment. Over the past few months, the coin has traded within a narrow range.
A combination of increasing U.S. institutional presence and the absence of China after sweeping bans last year may have led to Bitcoin becoming increasingly correlated with U.S. trading hours and U.S. traditional market indices.
Despite the malaise, cash has been leaving the sector. According to data tracked by fund provider, CoinShares, investors pulled roughly $120 million from crypto products last week, bringing the quarterly total to $339 million.
In what was its biggest single outflow week since June 2021, Bitcoin accounted for most of the flows last week.