Fed Fears Suddenly Sparks $100 Billion Crypto Price Crash — Sending Bitcoin, Ethereum, BNB, Solana, Cardano, XRP, Dogecoin, Polkadot, Tron, and Avalanche to Free Fall

Bitcoin
BTC
And ethereum and other major cryptocurrencies this weekend, as more than $100 billion was wiped from the cryptocurrency market after US Treasury Secretary Janet Yellen issued a stark warning about cryptocurrencies.

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Bitcoin price dropped to around $27,000 per bitcoin, the lowest price since late 2020 while the price of Ethereum dropped below $1,500 per ether. Smaller cryptocurrencies are doing worse, with BNB
BNB
Solana Cardano XRP
XRP
Dogecoin, tron, and avalanche have all seen a double-digit percentage decline in the past 24 hours.

The recent bitcoin and cryptocurrency sell-off was sparked by fears that the Federal Reserve could put its foot in the “gas” in its fight to lower inflation after the latest reading of the US Consumer Price Index showed that the economy is still overheating.

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“The Federal Reserve is stuck in a corner now,” crypto investor and influencer Anthony Pompliano wrote in his newsletter after the release of the latest inflation data.

Data on Friday showed that prices in the United States rose faster than expected in May, rising to 8.6% after falling in April, driven by rising energy and food costs and pushing inflation to its highest rate since 1981.

“Inflation has not subsided despite the Fed raising rates and doing quantitative tightening. They don’t have much choice other than just putting their feet on the gas. The Fed could try to accelerate rate increases, both in terms of speed and risk, along with Accelerate quantitative tightening. I’m not sure they’ll do that, but there aren’t many other ways to go.”

Next week, the Fed is expected to raise the benchmark interest rate to 1.25%-1.50%, following a similar move last month. a Reuters The survey found that economists expect another 50 basis point rate hike in July.

“[Friday’s] The inflation report is the last big release ahead of next Wednesday’s Fed meeting, Alex Kuptsekevich, chief market analyst at FxPro, wrote in an email note. “Renewing inflation to its highest levels in 40 years will certainly grab the public’s attention this weekend and will put pressure on the Federal Reserve. Such a higher reading is likely to lead to further toughening [Fed] Position in the accompanying comment.

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The bitcoin, ethereum and cryptocurrency market has been steadily declining over the past six months, collapsing along with the stock market as the Federal Reserve and other central banks around the world raise interest rates and begin to scale back pandemic-era stimulus measures. The Fed this month embarked on a long process of shrinking its bloated $9 trillion balance sheet, known as quantitative tightening.

“Bitcoin’s continued association with turbulent stock markets with macro forces has dampened optimism and fueled frustration at a time when the cryptocurrency appears to be losing the perfect opportunity to prove its forgotten role as a hedge against inflation,” Rich Blake, financial advisor at the crypto platform Stick, wrote in comments via post. mail.

“With monetary tightening accelerating worldwide, stocks remain, in the short term, vulnerable to lower dips, signaling telltale signs of a cyclical bear market.”

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