Bitcoin briefly dipped below $21.000 on Tuesday morning for the first time since December 2020, as investors anticipated a rate hike from the Fed.
The price of Bitcoin (BTC) briefly dropped below $21.000 in the early hours of Tuesday morning, a 52-week low for the world's largest cryptocurrency by market cap. Bitcoin dropped to $20.950, according to data from CoinMarketCap, before rebounding to its current price of around $22.620, down more than 6% on the day.
With a current market capitalization of $430 billion, Bitcoin is down more than 66% from its all-time high of $68.789 recorded in November 2021. cryptocurrency market with $531,62 million liquidated in the last 24 hours, according to data from Coinglass. Bitcoin’s Fear and Greed Index hit 8 out of 100, its lowest level since May 2022, suggesting extreme anxiety in the market.
Earlier today, Ethereum (ETH), the second-largest cryptocurrency, dropped as low as $1.094,70, also recording a 52-week low. Ethereum is currently trading at $1.220, up 1,3% on the day. The main reasons behind today's bearish price actions are rising global inflation rates and rate hikes by the US Federal Reserve. The US inflation rate has reached a 40-year high of 8,6%, but America is not alone. Rising prices are a global phenomenon, with all significant economies facing inflation. The inflation rate of European countries, including Germany (7,9%), France (5,25%), Netherlands (8,8%) and United Kingdom (9%), skyrocketed in May 2022. hardest-hit G20 country, with inflation rates above 73,5%, according to data from Trading Economics.
The rising rate of inflation globally is fueled by rising fuel costs and changing supply chain dynamics resulting from Russia's invasion of Ukraine. To control inflation, it is expected that the Fed implement a 0,75% increase in the interest rate, which in turn would increase bond yields tremendously, according to the Wall Street Journal. The Fed will hold a meeting to discuss the issue today, with an announcement expected tomorrow if the planned rate hike goes through. Of the top 10 cryptocurrencies, Cardano (ADA), Solana (SOL) and Dogecoin (DOGE) showed gains over the last 24 hours. Both SOL and ADA are up over 14%, while DOGE is trading slightly higher at 5,6% over the same period.
