In a dramatic turn of events on Thursday’s early afternoon trading session, the cryptocurrency market witnessed a substantial downturn, plunging to its lowest point in two months.
This development follows a period of subdued trading, characterized by a narrow range of fluctuations, which lasted for several months. The driving force behind this market shift was a surge in concerns over potential rate hikes, which subsequently curtailed investors’ appetite for risk.
Bitcoin (BTC), the world’s largest cryptocurrency in terms of market capitalization, experienced a sharp drop of 4.3%, sending its value plummeting to $27.8K. This decline occurred precisely at 12:10 p.m. Eastern Time (ET). Concurrently, Ethereum, another prominent player in the cryptocurrency realm, witnessed a significant slide of 5.2%, accompanied by analogous declines in various other tokens.
The collective consequence of these unfavorable developments was a notable contraction of the global cryptocurrency market’s value, which receded by 3.4%, settling at $1.11 trillion, as per data compiled by CoinMarketCap.
The weakening of cryptocurrency prices unfolded against the backdrop of surging global bond yields. Driven by robust economic data, these elevated yields have stirred apprehensions of further rate hikes, thereby diminishing the allure of alternative investments such as cryptocurrencies.
The reverberations of this crypto market slump were felt on a broader scale, as all three major U.S. stock-market indices traded in the red at the time of writing. This downturn came in the wake of the release of the minutes from the Federal Reserve’s July meeting, which revealed that several policymakers expressed openness to implementing additional rate increases as a measure to curb inflation.
Furthermore, stocks linked to the cryptocurrency sphere were not spared from the market turmoil. CleanSpark (CLSK) experienced a significant drop of 11.5%, while Riot Platforms (RIOT) and Marathon Digital (MARA) encountered respective losses of 9.7% and 9.3%. HIVE Blockchain (HIVE) saw its value dip by 7.6%, while MicroStrategy (MSTR) and Coinbase Global also faced losses of 5%. These intraday declines were among the most prominent observed during this tumultuous trading session.