Both traditional financial markets like stocks and new risky investment channels like cryptocurrencies are impacted negatively by the latest US inflation report. After the August CPI was higher than forecasts, Bitcoin’s price plummeted 8.7% to close to the $20,000 mark. Previously, from September 9-13, Bitcoin was still trading above $21,000 and briefly above $22,200.
Bitcoin’s capitalization lost more than $50 billion and is currently at the $389 billion mark. The capitalization of the whole crypto market also adjusted below the $1 trillion mark.
During the previous spike, Bitcoin was among the top 10 by market cap with the biggest gains. And this time, the coin is also the leading cryptocurrency in the decline.
Some other cryptocurrencies like Ethereum, Binance coin, XRP, Cardano, and Dogecoin adjusted around 4-6%. Solana alone suffered the heaviest damage in the past 24 hours, down 10%.
On the derivatives channel, there were more than 97,000 accounts and $357 million liquidated.
During the latest rally, some analysts believed that the positive movement in the market may not last long. However, the CPI higher than expected is still beyond speculation.
The US stock market has also suffered heavily. Specifically, the Dow Jones dropped 1,276 points (-3.94%) to 31,104.97 points; The S&P 500 fell 177.72 points (-4.32%) to 3,932.69 points, the Nasdaq 100 dropped 632.84 points (-5.16%) to 11,633.57.
The August CPI report also showed that inflation was higher than expected. Compared to last month, CPI increased by 0.1% despite the drop in fuel prices. Core inflation increased by 0.6%. On an annualized basis, inflation hit 8.3%.
Previously, economists expected a 0.1% drop in CPI and 0.3% for basis CPI. This is the last updated data that Fed will review before the September 20-21 meeting, when the central bank plan to make the third increase in interest rates by 0.75% to reduce inflation.
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