Crypto asset market prices fell across the board on Thursday, after data showing US inflation at a 40-year high further eroded fading demand for riskier assets.
Bitcoin, the largest cryptocurrency by market capitalization, fell as much as 5.1 percent on Thursday in New York to $18,201, the lowest in about three weeks. The September low was the smallest since prices fell in June after crypto lender Celsius collapsed. Ether fell as much as 8.2 percent, with both coins trending toward the lower end of their respective ranges. Each is down more than 60 percent this year.
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“Crypto markets are dumping right now,” said Garry Krugljakow, founder of 0VIX and GOGO Protocol, an open source DeFi protocol for asset management and savings. He added that the market selloff in Bitcoin “will be continuous until the next Federal Reserve meeting in November.”
Minutes from the Fed’s September meeting on Wednesday showed officials were committed to raising interest rates to curb inflation, a touchstone for crypto activity where Bitcoin has largely moved in step with risk assets. The core consumer price index, which excludes food and energy, rose 6.6 percent from a year ago, the highest level since 1982, Labor Department data showed Thursday.
Meanwhile, altcoins including Solana, Avalanche, Polygon and Cardano fell more than 9 percent. As interest rates have risen this year, traditional markets such as U.S. Treasuries and corporate bonds have outperformed among decentralized finance protocols where returns are declining.
Volatility has also been absent from crypto in recent months, with fiat currencies taking their place as the new hotspot for traders looking to profit from price differences across exchanges. The T3 Bitcoin Volatility Index is down 6.7 percent since the start of September, while the JPMorgan Global FX Volatility Index is up 13.4 percent.
“Altcoins have been trading above the trend lines,” said Fadi Aboualfa, head of research at crypto depository Copper. “It could be markets are giving things their last test to see if things can hold, but they could certainly drop much lower with ETH testing just under $1k, and Solana around $27.”
Some market watchers had noticed in recent days that Bitcoin had behaved in a less volatile manner than stocks. Since the beginning of September, the coin has underperformed the S&P 500, for example.
But the coin’s – and Ether’s – relative strength in recent months has been an “illusion,” said John Roque at 22V Research.
“Many had pointed out that Bitcoin in particular had shown remarkable chutzpah over the past few months as it held firm in the face of declining equity,” he wrote in a note, adding that he sees Bitcoin falling to $10,000 and Ether falling to the $420 level.
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