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Wednesday, February 8, 2023

Cryptocurrency selloff extends through the weekend after Friday’s hot inflation reading

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Bitcoin and other cryptocurrencies tumbled on Sunday as losses for the asset class built over the weekend following U.S. data that showed persistent inflation pressures.


dropped more than 3% to $27,429, with Ethereum falling more than 3% to $1,471, while sharper losses were seen for meme coins such as Dogecoin
off more than 7%.

Cryptocurrencies, which trade 24 hours, are tracking deep losses for Wall Street following Friday’s data that showed U.S. inflation rose 1% in May, well above the 0.7% monthly rise forecast by economists surveyed by The Wall Street Journal. The annual rate rose 8.6%, topping the 40-year high of 8.5% seen in March. The Dow industrials
S&P 500
Nasdaq Composite

suffered the biggest weekly losses since January. The Dow tumbled 880 points on Friday.

Investors are worried that inflationary pressures will trigger more aggressive action by the Federal Reserve, which meets next week.

Losses swept across perceived riskier assets, with cryptocurrencies falling Friday as well. From Sunday’s price of just over $27,000, bitcoin has dropped close to 60% from a November 2021 high. #Cryptocrash and #bitcoincrash were trending on Twitter.

Read: Stocks sink again as hot inflation reading triggers market shock waves: What investors need to know

“From the next cycle’s view, we are probably near the bottom but that doesn’t mean that price can nuke 50% further,” the co-founder and chief operating officer of crypto price-tracking company CoinGecko, Bobby Ong, warned Sunday in a Twitter thread.

“FWIW, I don’t think we are at the bottom yet coz conferences are still full, crypto parties are still extravagant, still seeing excesses among teams, macro environment is still weak. The layoffs have started but not widespread yet. Stay strong and manage your positions well,” he added in that thread.

Amid tumbling prices of cryptocurrencies this year, Coinbase and other crypto companies have frozen hiring or announced layoffs, with crypto exchange, Gemini, announcing recently that 10% of jobs will be eliminated.

Read: “I thought it was a sick joke’: They gave up other job offers to work for Coinbase, and are now unemployed

Some crypto watchers agreed with Ong that prices could go much lower, though said that might mean potential opportunities as well:

And other crypto investors maintained that selloffs are a reminder to always diversify:

To some, though, the message is frankly investors beware of losses ahead for a vast swath of asset classes:

Read: ‘The goal is never to seek the top’: The wild, hair-raising ride of a 30-something investor who battled against NFT hackers and dodged the crypto crash

And: New crypto bill could give CFTC another boost in its quest to regulate digital assets


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