Bitcoin Hit Hard by Inflation Fears, Suffers Worst Daily Drop Since January
Bitcoin has only fallen this much during a single day on one other occasion this year
Blockworks exclusive art by axel rangel
key takeaways
- Crypto markets lost $140 billion after market sentiment turned sour on jitters surrounding the Federal Reserve’s latest efforts to control inflation
- Bitcoin tanked 10% to notch its second-largest intraday fall this year and traded at its lowest point in four months
Bitcoin recorded its worst daily drop in four months on Thursday, dropping almost 10% to lows not seen since January.
The top cryptocurrency by market capitalization started the day at $39,727, but by mid-afternoon ET slid below $36,000, according to CoinMarketCap data.
Bitcoin has plummeted this much in a single day on just one other occasion this year. On January 21, BTC opened at $40,699 but gradually dropped 12% to trade below $35,800 by the end of the day.
The rest of the crypto market followed suit. Ether lost about 7%, while Solana was the worst hit of the top 10 digital assets, losing 15%.
Cryptocurrencies overall shed 7.5%, or $140 billion — from $1.9 trillion to $1.76 trillion, marking the market’s lowest capitalization since February.
Weak crypto echoed sentiment across equities. During intraday trading, the Dow gave up 3.5%; the S&P 500 fell 5%; and the NASDAQ lost 5.5%. On the other hand, 10-year Treasury bond yields jumped 3.1%.
The losses came despite general market enthusiasm Wednesday, when both the S&P and NASDAQ jumped about 3%.
Analysts figured the widespread relief rally showed confidence in Federal Reserve Chair Jerome Powell’s ability to taper inflation without triggering a recession.
Powell had pledged to not hike the benchmark interest rate by 0.75% in the immediate future, instead re-affirming his 50-basis point strategy.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your day with top crypto insights from David Canellis and Katherine Ross.
- Forward Guidance: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.
- 0xResearch: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.
- Lightspeed: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.
- The Drop: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.
