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.
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 DJIA,
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.
“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. COIN,
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: