Cryptocurrencies saw a broader weekend retreat as CPI data on Friday night showed another 40-year high in U.S. inflation, with Ethereum falling more than 6 percent at one point to its lowest level since March 2021 and Bitcoin falling more than 5 percent to below $27,000, its lowest level in more than a year.
Almost all of the top tokens fell on Sunday, with Dogecoin and Avalanche dropping 9.4 per cent and 13 per cent, respectively, before rebounding.
Us inflation data on Friday beat expectations, dashing hopes that price rises might have peaked. Stocks tumbled, while the yield on the two-year Treasury note climbed to its highest level since 2008. Bitcoin and other cryptocurrencies have already taken a beating in recent months as the Federal Reserve raised interest rates and global policy makers stepped up efforts to combat rising prices, as well as a pullback in risky assets like tech stocks.
China International Capital Corporation research Report pointed out that THE US CPI in May grew by 8.6% year on year, another record; Core CPI rose 6 per cent year-on-year, also higher than expected. In terms of items, almost all important items are rising, indicating strong internal momentum for inflation. If CPI continues to rise at the current month-on-month pace in June, inflation will be even higher.
Cicc said the record high inflation poses a major challenge for the Fed, which may need more aggressive monetary tightening if it wants to control inflation, while tighter monetary policy will increase downward pressure on the economy and increase the probability of a recession. One possibility is that the Fed will have to trade a recession for price stability, creating a "Volcker moment" of that year. This also means that overseas capital market adjustment is not over, the double killing of stocks and bonds is still the main melody.
Vijay Ayyar, vice president of corporate development and international at cryptocurrency trading platform Luno, said the bearish sentiment is likely to continue into this week, with bitcoin typically falling more than 80% and copycats typically falling more than 90% if you look back at previous bear markets. If this continues, bitcoin will be much lower in the next month or two.
Some analysts say that if bitcoin falls below the higher end of its $20,000 range, it could quickly fall to its 200-week moving average, or $22,000, or even its 2017 high of $19,511.
According to Coinglass, cryptocurrency long clearing totaled more than $100 million on Sunday for the third straight day, up from $258 million on Friday and $290 million on Saturday. The MVIS CryptoCompare Digital Asset 100 index, a cap-weighted measure that tracks the performance of the 100 largest tokens, fell to its lowest level since January 2021.