Bitcoin And The Broader Cryptocurrency Market Fell Sharply
Following the U.S. Federal Reserve's indication of retaining a hawkish stance as indicated in the meeting minutes published on August 16, Bitcoin and the wider crypto market sold off sharply, with crypto traders suffering $1 billion in liquidations.
Bitcoin (BTC) dropped by 6.8%, currently trading around $26,600 after hitting a two-month low of $25,500 earlier on. The rush to sell resulted in the elimination of around $822 million worth of long positions and $194 million in shorts. Bitcoin and Ethereum traders faced the most substantial liquidations over the past 24 hours, at $488 million and $303 million, respectively. This marks the highest level of Bitcoin liquidations in a single day since June 2022, when its price plummeted to $17,000.
Ethereum (ETH) faced similar challenges. After a 6% dip over the past 24 hours, it is currently trading at $1,680, having reached $1,551 earlier on.
The S&P 500 index also dropped, falling 0.76% and continuing its previous-day decrease. The Fed's rate estimates helped the dollar index (DXY), which gained 0.55% this past week and a one-month high, showing strength against other major currencies.
The benchmark interest rate was increased to 5.25%-5.50% during the previous month's Fed policy rate meeting, setting a 22-year high.
Inflation rose by 3.2% year over year in July, according to the Consumer Price Index (CPI), but crypto prices remained largely unchanged despite the smaller increase. The CME's FEDWatch tool showed an increase in rate rise predictions from 10% to 13.5% as a result of this release, upping those forecasts. In the press release, it was also suggested that measures may be taken to gradually raise inflation to 2%.