Amid a sharp decline in the prices of most cryptocurrencies, the total market capitalization fell below the $1 trillion mark.
The chart below shows that the current value of $953 billion is comparable to the levels at the end of January 2021.
On the night of June 14, the indicator fell below the level of $900 billion.
Analysts at Blofin attribute the turbulence in financial markets to a drop in confidence in risky assets against the backdrop of accelerating inflation in the US and response measures to tighten monetary policy.
CME FedWatch data indicates a 67.8% chance of a 50bp Fed rate hike in June, a 32.2% chance of a 75bp increase, and an 83.5% chance of a 75bp increase in July. P.
Inflation in the United States in annual terms in May amounted to 8.6%, which was the highest value since December 1981.
“Higher-than-expected figures have alarmed investors. They were worried that rising inflation would plunge the economy into recession,” Blofin experts shared their thoughts.
The 2-year Treasury yield reached 3.22%, the highest level since 2007. The value briefly exceeded that of 10-year Treasuries.
In all likelihood, investors fear that the Fed will take more aggressive measures to curb inflation. An inverted yield curve usually signals an upcoming recession.
At the time of writing, Bitcoin is trading around $22,390 and Ethereum is trading at $1,220, according to CoinGecko. Price declines in relation to historical price highs amounted to 67.4% and 74.9%, respectively.
Former BitMEX CEO Arthur Hayes found a significant concentration of open interest in options on the Deribit exchange at $20,000 and $1,000 for Bitcoin and Ethereum, respectively. According to him, falling prices below the designated levels are fraught with massive selling pressure on spot markets.