Cryptocurrency crash is gaining momentum as inflation marks the fastest rising pace since 1981

Bitcoin and other cryptocurrencies fell on Sunday, with losses in the asset class over the weekend after US data showed persistent inflation pressures in May, posting the fastest pace of increase since December 1981.

Bitcoin BTCUSD,
-0.93%
It fell about 3% to $27,743, with Ethereum dropping more than 3.8% to around $1,494, while sharper losses were seen in meme coins like Dogecoin DOGEUSD,
-2.73%And the
from more than 5%, at the last scan late Sunday morning, according to CoinDesk data.

The 24-hour cryptocurrency is tracking deep losses on Wall Street after data on Friday showed that US inflation rose 1% in May, well above the 0.7% monthly rise expected by economists surveyed. conducted by The Wall Street Journal. The annual rate rose 8.6 percent, surpassing a 40-year high of 8.5 percent in March. Dow Jones Industrial Average DJIA,
-2.73%And the
S&P 500 SPX,
-2.91%And the
Nasdaq Composite Corporation,
-3.52%
It incurred its largest weekly loss since January. The Dow Jones fell 880 points on Friday.

Investors are concerned that inflationary pressures will lead to more aggressive action by the Federal Reserve, which holds its two-day policy meeting on Tuesday, with a half percentage point increase in the Fed funds rate expected at the conclusion of the rally on Wednesday. This policy rate currently stands in the 0.75%-1% range.

Stock losses swept the perceived riskier assets, with cryptocurrencies lower on Friday as well. From Sunday’s price of just over $27,000, Bitcoin is down nearly 60% from its high in November 2021. #Cryptocrash and #bitcoincrash have been trending on Twitter.

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“From the perspective of the next cycle, we may be close to the bottom but that does not mean the price can reach 50% more,” Bobby Ong, co-founder and chief operating officer of crypto price tracker CoinGecko warned Sunday in a Twitter thread.

“FWIW, I don’t think we’re at the bottom however Coz conferences are still packed, crypto parties are still extravagant, there is still cross-overruns between teams, and the macro environment is still poor. Layoffs have started but not yet spread. Stay strong and manage your positions well. Good,” he said via Twitter.

Amidst the drop in cryptocurrency prices this year, some cryptocurrency exchanges have emerged, including Coinbase Global Inc. Coins,
-7.92%
It has frozen hiring or announced layoffs, with crypto exchange Gemini recently announcing that 10% of jobs will be cut.

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Cryptocurrency prices may drop quite a bit, according to some industry watchers. However, some digital asset bulls assert that the current downturn could also mean potential opportunities:

Other observers of the cryptocurrency carnage asserted that the sell-off could serve as a reminder of the benefits of diversification:

However, the message for some is that investors are frankly wary of future losses for a wide range of asset classes:

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And the: New crypto bill could give CFTC another boost in its quest to regulate digital assets

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