Bitcoin and other cryptocurrencies fell on Tuesday, following the August inflation report, which revealed that prices grew faster than expected.
Early Tuesday afternoon, Bitcoin was trading at $20,783, down more than 6% since the publication of inflation statistics and outperforming the declines in the S&P 500 (-3.1%) and Nasdaq Composite (-4%). The value of the cryptocurrency dropped from $22,719 after increasing by more than 17% over the previous week.
The losses serve as a reminder that the fortunes of cryptocurrencies are still closely correlated with those of the central bank.
According to Edward Moya, senior market analyst at Oanda, “hopes of a gentle landing, the conclusion of the Fed raising cycle, and a strong consumer, are dwindling away.” Therefore, cryptocurrencies will be susceptible to additional selling pressure in the near future.
According to cryptocurrency derivatives aggregator Coinglass, about $144 million worth of trader bets on bitcoin have been liquidated in the last four hours, with about 82% of that coming from long vs short BTC holdings.
Since the beginning of the month, there have been a flood of fresh chances for volatility trading companies, which can adopt neutral market positions on a variety of crypto assets.
Crypto index tracker Nomics reports that during the preceding week, trade volumes on all exchanges increased by 54% to $738 billion, while activity in dollars increased by 24% to $126 billion.
With Oanda’s Moya pointing out that traders may have been planned for a “sell the event” reaction to the protocol’s eagerly anticipated Merge conclusion scheduled for early Thursday morning, Ether, which has lost roughly 7% for the same 24-hour period, has already lost pace over the weekend.
The second-largest cryptocurrency by market capitalization, which will complete the switch to proof of stake in less than two days, was trading below $1,600 at noon on Tuesday and exhibiting some signs of recovery after falling to its lowest price in the past week of $1,588.
Companies that have bitcoin listed as an asset on their balance sheets include Marathon Digital (MARA), Coinbase Global (COIN), Block (SQ), and MicroStrategy (MSTR), all of whose shares have plummeted and are down 7 to 10% on the day as of midday.
The largest corporate bitcoin holder, MicroStrategy, is trading at $235 per share, down more than 10% since the revelation of the inflation statistics. A recent registration for the option to sell up to $500 million in stock to buy more Bitcoin was made by the business intelligence software company turned Bitcoin whale.
According to Coinmarketcap, as of Tuesday at noon New York time, the entire market capitalization of all crypto assets has decreased by about 6% on the day from $1.07 trillion to $1 trillion.
