Cryptocurrencies slump on US inflation data with Ether dropping to lowest since March 2021

Bitcoin and other tokens have suffered in recent months as the Fed raises rates and policy makers step up efforts to combat price increases

Cryptocurrencies dropped after US inflation hit a 40-year high. Reuters
Powered by automated translation

Bitcoin and Ether fell on Sunday in a broad retreat by cryptocurrencies after data showed US inflation had hit a 40-year high.

Ether declined as much as 5 per cent to $1,445.56, its lowest level since March 2021, while Bitcoin dropped to as low as $27,264.65, its lowest since May 12.

Almost all tokens tracked by Bloomberg were down on Sunday, with the likes of Dogecoin and Avalanche falling by more than 7 per cent as of 7am UAE time.

US inflation figures released on Friday exceeded expectations, dashing any hopes that rising prices have peaked. Stocks sank, while two-year Treasury yields climbed to their highest since 2008.

Bitcoin and other cryptocurrencies have suffered in recent months as the Federal Reserve raises rates, policymakers intensify efforts to combat price increases, and as risk assets like technology stocks retreat.

The US inflation data is helping fuel the downwards action into the weekend and “very likely we see this bearishness continue on to the next week especially with the FOMC meeting coming up,” said Vijay Ayyar, vice president of corporate development and international at cryptocurrency platform Luno.

“If one looks at previous bear markets, Bitcoin has declined around 80 per cent-plus normally, with alt-coins typically doing 90 per cent-plus,” Mr Ayyar said.

“If that remains the case, we could see much lower Bitcoin prices over the next month or two.”

Updated: June 12, 2022, 6:10 AM