Bitcoin and other cryptocurrencies tumbled on Sunday, with losses for the asset class building over the weekend following U.S. data that showed persistent inflation pressures in May, marking the fastest pace of increase since December 1981.
dropped more than 7%, and at one point fell to $24,990, its lowest level since December 2020. Ethereum fell more than 9% to around $1,340, while sharper losses were seen for meme coins such as Dogecoin
off about 9%, at last check Sunday night, according to CoinDesk and Kraken data. Crypto lending platform Celsius announced it was pausing all withdrawals and transfers amid “extreme market conditions,” as its CEL digital token plunged nearly 50% late Sunday.
Cryptocurrencies, which trade 24 hours, are tracking deep losses for Wall Street following Friday’s data that showed U.S. inflation rose 1% in May, well above the 0.7% monthly rise forecast by economists surveyed by The Wall Street Journal. The annual rate rose 8.6%, topping the 40-year high of 8.5% seen in March. The Dow Jones Industrial Average
suffered the biggest weekly losses since January. Stock futures sank Sunday night, with Dow futures down more than 200 points.
Investors are worried that inflationary pressures will trigger more aggressive action by the Federal Reserve, which convenes its two-day policy meeting Tuesday, with an expected half-a-percentage point increase to the fed-funds rate expected when the gathering concludes on Wednesday. That policy rate currently stands at a range of 0.75%—1%.
Equity losses swept across perceived riskier assets, with cryptocurrencies falling Friday as well. From Sunday’s price of just over $25,000, bitcoin has dropped more than 60% from its November 2021 high. #Cryptocrash and #bitcoincrash were trending on Twitter.
Read: Stocks sink again as hot inflation reading triggers market shock waves: What investors need to know
“From the next cycle’s view, we are probably near the bottom but that doesn’t mean that price can nuke 50% further,” the co-founder and chief operating officer of crypto price-tracking company CoinGecko, Bobby Ong, warned Sunday in a Twitter thread.
“FWIW, I don’t think we are at the bottom yet coz conferences are still full, crypto parties are still extravagant, still seeing excesses among teams, macro environment is still weak. The layoffs have started but not widespread yet. Stay strong and manage your positions well,” he said via Twitter.
Amid tumbling prices of cryptocurrencies this year, some crypto trading platform, including Coinbase Global Inc.
have frozen hiring or announced layoffs, with crypto exchange, Gemini, announcing recently that 10% of jobs would be eliminated.
Read: “I thought it was a sick joke’: They gave up other job offers to work for Coinbase, and are now unemployed
Crypto prices could go much lower, according to some industry watchers. That said, some digital-asset bulls make the case that the current downturn also might mean potential opportunities:
Other observers of the crypto carnage maintained that selloffs can serve as a reminder of the benefits of diversification:
To some, though, the message is frankly investors beware of losses ahead for a vast swath of asset classes:
Read: ‘The goal is never to seek the top’: The wild, hair-raising ride of a 30-something investor who battled against NFT hackers and dodged the crypto crash
And: New crypto bill could give CFTC another boost in its quest to regulate digital assets