Bitcoin price dropped Sharply on Saturday, dragging the entire market with it following the release of key inflation data yesterday, which seemingly rattled crypto investors.
According to CoinGecko, the largest digital coin by market cap currently trades at $23,109, representing a 4% decrease in the past 24 hours. Last week, Bitcoin broke above the $25,000 mark for the first since June 2022.
Other leading digital assets have also dropped. For example, Ethereum has posted a 3.4% decline in the past day to trade at $1,523; Dogecoin is changing hands for $0.081, representing a drop of 3.5%; while Palkadot, Polygon, and Avalanche are the biggest losers among the top 20 coins, each posting a 6.8% drop.
As usual, the crypto market is following that of US equities. Investors are now moving away from the assets considered highly risky such as digital assets and stocks, following the key Inflation data that signals the possibility of more interest hikes by the US Fed.
The Inflation Report and Investors’ Reaction
Friday’s report revealed that inflation in the United States increased. The personal consumption expenditure price index went up by 5.6% from 2022. In addition, the core metric rose by 4.8%.
The Equities investors reacted to the report by selling S&P 500, which dipped by 1.7%, Nasdaq, which declined by 2%, and the Dow Jones Industrial Average, which fell by 1.3%.
James Butterfill, Coinshares’ Head of Research, says crypto and stock investors are selling because they expect the Fed to remain hawkish.
The US central bank began hiking interest rates in 2022 in an effort to tame the high inflation in the country. It raised the rates by 75 basis points four times before slowing down to 50 basis points.
Earlier this month, the Fed increased the rates by only 25 basis points. Many crypto investors were bullish about the central bank’s move at the time, so the market did not go in the red.
However, Fed Chairman Powell has continued to insist that the road ahead to bring inflation under control will be bumpy.
Investors Shift to ‘Safe-Haven’ assets
Meanwhile, recent data shows that investors are channeling their money into less risky assets like the United States Dollar. According to the data, the dollar index rose by 0.6% yesterday, its highest in almost three months.
