Bitcoin and other cryptocurrencies tumbled on Sunday, as losses in the asset class piled up over the weekend after U.S. data showed lingering inflationary pressures in May, marking the pace of increase fastest since December 1981.
Bitcoin, fell around 3% to $27,530, Ethereum 2.5% to around $1,484, while bigger losses were seen for meme currencies such as the lower Dogecoin. around 5%, at the last point on Sunday afternoon, according to data from Coingecko.
Cryptocurrencies are trailing Wall Street losses after data on Friday showed US inflation rose 1% in May, well above the monthly rise of 0.7% economists had forecast. The annual rate rose 8.6%, surpassing the high of 8.5% reached in March 40 years ago. The Dow Jones Industrial Average DJIA, -2.73%, S&P 500 SPX, -2.91%, Nasdaq Composite COMP, -3.52% suffered the largest weekly losses since January. The Dow Jones fell 880 points on Friday.
Investors fear inflationary pressures could trigger more aggressive action from the Federal Reserve, which holds its two-day policy meeting on Tuesday with a planned half-percentage-point hike in the federal funds rate. at the end of the meeting on Wednesday. This key rate is currently in a range of 0.75% to 1%.
Equity losses swept away assets perceived as riskier, with cryptocurrencies also falling on Friday. Since its Sunday price of just over $27,000, bitcoin has fallen nearly 60% from its November 2021 high. #Cryptocrash and #bitcoincrash were trending on Twitter over the weekend.
“From the perspective of the next cycle, we are probably near the bottom, but that does not mean that the price can nuke 50% more.cryptocurrency price tracking firm CoinGecko co-founder and COO Bobby Ong warned in a Twitter thread on Sunday.
1/ Some stats on previous market cycles:
BTC: $1,127 –> $200 (-82%)
BTC: $19,423 –> $3,217 (-83%)
ETH: $1,448 –> $85 (-94%)
BTC: $67,167 –> $27,682 (-59%)
ETH: $4,815 –> $1,466 (-69%)
Make what you want with the info above.
—Bobby Ong (@bobbyong) June 12, 2022
“FWIW, I don’t think we’re at the bottom of the hole yet because the conferences are still full, the crypto parties are still extravagant, we still see excesses among the teams, the macro environment is still weak. The layoffs have started but are not yet widespread. Stay strong and manage your positions well“, he said via Twitter.
Amid falling cryptocurrency prices this year, some exchanges including Coinbase have frozen hiring or announced layoffs, with cryptocurrency exchange Gemini recently announcing that 10% of jobs would be cut.
Cryptocurrency prices could go much lower, according to some industry watchers. That said, some digital asset advocates argue that the current downturn could also be synonymous with potential opportunities:
Crypto is already past oversold and undervalued at these prices.
Doesn’t mean we can’t go down further (we certainly can and probably will) – but there are already life changing opportunities on the table for those willing to buy and hold for the long term.
—Jon ShapeShift (@ShapeShiftCOO) June 12, 2022
Other crypto karch-watchers have argued that meltdowns can serve as a reminder of the benefits of diversification:
This kind of diversity feels real nice to have during the #crypto bear market.
— Lark Davis (@TheCryptoLark) June 12, 2022
For some, however, the message is frankly investors beware of the losses ahead for a wide range of asset classes:
⚠️ Stocks and crypto are screaming very loudly this party is well and truly over, but not everyone wants to accept it yet. If you don’t want to listen, find out the hard way.
— Marc-André Fongern (@Fongern_FX) June 12, 2022