Here’s why $80 billion was wiped from the crypto market
In the last 24 hours, a significant amount has been deleted from the crypto market. Billions of dollars were stripped from their market value as cryptocurrencies such as bitcoin lost roughly 10% of their value over the same time period. Following this, Charles Hoskinson, founder of the Cardano network, has shared his thoughts on what caused the market to crash.
Inflation is the culprit
Taking to Twitter, Cardano founder Charles Hoskinson explained that the high inflation rate was the cause of the market crash. It’s no secret that the inflation rate in the US has risen over the past couple of months, and the latest CPI data report saw yet another rise in inflation, triggering panic across the financial markets.
On headline inflation, there was only a 0.1% increase according to the CPI data, while core inflation rose 0.6%. Despite the fact that these figures were not “large” compared to previous inflationary increases, it showed that inflation was not slowing down. With the year-over-year inflation rate now at 8.3%, it triggered a massive sell-off in the market.
Hoskison shared a report from CNBC that showed the crypto market wasn’t the only hit in the selloff that accompanied the release of the CPI data. The DOW had fallen 1,200 points in a single day, which was the largest single-day drop on record in the past two years.
Market cap drops to $951 billion | Source: Crypto Total Market Cap on TradingView.com
Hoskinson’s statements on the subject of inflation were: “I remember attending a dinner party in Abu Dhabi and sitting next to a famous economist who told me that inflation had nothing to do with printing huge sums of money. Those responsible are a delusional cult. You get the bill.”
The crypto market has lost a total of $80 billion in the last 24 hours, bringing its total market cap back below $1 trillion. Now the market is looking towards the FOMC meeting which is scheduled to take place at the beginning of next week. The decision will also have a significant impact on the market. But before then, the Ethereum Merge presents another event that could have an impact on the market.
Bitcoin’s strong correlation with the stock market also has an impact on the market. This means that for there to be an improvement in the crypto market, an improvement in the stock market will help it on its way. But with inflation rates remaining so high, recovery may remain a long way off until more positive news emerges.
Featured image from Forkast, chart from TradingView.com
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