Ethereum Falls Amid Crypto Selloff As Traders Assess Uncertainty

• Ethereum fell as much as 7% and bitcoin fell 3% in less than 30 minutes early Wednesday.
• Altcoins take a hit too, with solana and polygon down 8% and 5% respectively.
• It is unclear what led to the sale, but markets have been sensitive to signs of central bank tightening.

Ethereum fell as much as 7% on Wednesday amid a broader crypto market selloff as traders navigate a scary environment.

Bitcoin fell nearly 3% in less than 30 minutes early this morning, according to Messari. Meanwhile, altcoins are also taking a hit, with Solana and Polygon down 8% and 5% respectively.

Although it is unclear exactly what led to the price decline, markets have been sensitive to signs of central bank tightening.

The Federal Reserve has consistently raised interest rates for over a year to combat decades of high inflation, and is widely expected to raise rates by another 25 basis points next month.

Abroad, CPI data indicated UK inflation remains above 10%, meaning the Bank of England may need to raise interest rates further.

“After last month’s shock CPI reading, today’s print still shows double-digit inflation,” Giles Coghlan, market analyst at financial firm HYCM, told Insider in a statement. “This is a sign that inflation is not yet back on track and the long-awaited decline towards pre-Covid levels is not quite there.”

Coghlan added: “The question investors will be asking now is, where does the Bank of England go from here?”

Other experts said recent inflation data did not play into the market decline. Rather, it was a large crypto holder, commonly known as a “whale,” offloading a massive position on an exchange.

“It may have been caused by a whale that sold around 16,000 BTC on Binance in the market,” Timothy T. Shan, COO of decentralized exchange Dexalot, told Insider. “This then triggered a general reduction in longs (including leveraged longs) across the market.”

Alex Altgausen, CEO of blockchain gaming startup Banksters, pointed to Binance enabling the withdrawal of stakes following Ethereum’s latest software upgrade.

“ETH’s price drop can be attributed to the activation of ETH unstaking on Binance. After years of waiting, people can now unstake and sell their profits, contributing to the price drop,” Altgausen told Insider.

Volatility has returned to the market after months of upside for digital assets.

Ethereum hit an 11-month high following its long-awaited Shanghai upgrade, also known as “Shapella”, last week. Elsewhere, bitcoin hit a 10-month high and has risen 39% in the past three months.