Crypto extends tumble after US inflation data

Bitcoin dropped to as low as US$27,264.65, its lowest since May 12, 2022. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Bitcoin and Ether fell on Sunday (June 12) amid a broader retreat by the cryptocurrency complex in the wake of data showing US inflation hitting a fresh 40-year high.

Ether declined as much as 5 per cent to US$1,445.56, its lowest level since March 2021, while Bitcoin dropped to as low as US$27,264.65, its lowest since May 12.

Virtually all top tokens tracked by Bloomberg were down on Sunday, with the likes of Dogecoin and Avalanche down more than 7 per cent as at 11am Singapore time.

United States inflation data on Friday topped expectations, dashing any hope that rising prices may have peaked. Stocks sank, while two-year Treasury yields climbed to the highest since 2008.

Bitcoin and other cryptocurrencies have suffered in recent months as the Federal Reserve hikes rates and global policymakers step up efforts to combat price increases, and as risk assets like technology stocks retreat.

The US inflation data was helping fuel the downward action into the weekend and "very likely we see this bearishness continue on to the next week especially with the FOMC (Federal Open Market Committee) meeting coming up", said Mr Vijay Ayyar, vice-president of corporate development and international at crypto platform Luno.

"If one looks at previous bear markets, Bitcoin has declined around 80 per cent-plus normally, with altcoins typically doing 90 per cent-plus," said Mr Ayyar. "If that remains the case, we could see much lower Bitcoin prices over the next month or two."

Total long crypto liquidations were above US$100 million (S$138.6 million) for a third straight day on Sunday, after US$258 million on Friday and US$290 million on Saturday, according to data from Coinglass. The MVIS CryptoCompare Digital Assets 100 index, a market cap-weighted measure tracking the performance of the 100 largest tokens, fell to the lowest level since January 2021.

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