Crypto Briefing | Jun 13, 2022 07:45AM ET
May’s CPI data has severely impacted global financial markets, dragging risk-on assets like cryptocurrencies lower. The total cryptocurrency market cap has fallen below $1 trillion for the first time since January 2021. h2 Crypto In Crisis/h2
Crypto investors appear to be rushing for the exit after more macroeconomic turbulence.
The crypto market has extended losses following Friday’s higher-than-expected consumer price index inflation. Over the weekend, Bitcoin dropped by 17.4%, registering a new yearly low of around $23,911. Ethereum, the second-largest cryptocurrency, fared worse, plummeting 27.3% in the same period.
Despite the Federal Reserve raising interest rates by a total of 75 basis points in 2022, inflation has shown little sign of letting up, making more aggressive rate hikes more likely going forward.
By raising rates, the Fed hopes to bring inflation back down to an acceptable level by slowing economic growth. However, doing so negatively impacts risk-on assets such as equities and cryptocurrencies.
Since the Fed first committed to raising rates earlier this year, the crypto market has shed over $800 billion in value. In March, the sector’s total market cap hovered around $1.8 trillion; now, data from CoinMarketCap shows that the asset class’ value has dipped below $1 trillion for the first time since January 2021.
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