Bitcoin hits the lowest weekly close since 2020 on inflation fears. Bitcoin and other major cryptocurrencies fell sharply over the weekend. The correlation between stock and cryptocurrency prices continues as higher-than-expected inflation panics financial markets. A bearish channel on the weekly chart of BTC indicates a further decline to $12,360.
Bitcoin (BTC) continued its sell-off over the weekend, closing at $26,578 on Sunday, a level last seen in late 2020. On Monday, BTC continued its decline, falling more than 8% in the last 24 hours to a current price of $25,446. According to CoinMarketCap, the total market capitalization of cryptocurrencies has fallen below $1.1 trillion, with a loss of more than $100 billion (6.6%) in the same period.
The downturn in the crypto market was triggered by Friday’s consumer price report, which noted a further increase in inflation. As a result, crypto investors went on the defensive over the weekend, fearing a more aggressive response from the Federal Reserve.
Bitcoin’s growing correlation with the stock market.
The ongoing crypto bloodbath revealed a growing correlation between bitcoin and the stock market. As a result, the decline in cryptocurrencies also followed the stock market, which fell after the release of the latest consumer price index over the weekend. The CPI was expected to slightly favor consumers. Instead, they surprisingly rose more than 8.6% year-over-year, reaching their highest level in 40 years, indicating that the cost of living will likely continue to rise for some time. The tech stock NASDAQ fell 3.5%, the S&P 500 fell 2.57%, and the Dow Jones fell 2.5%.
In addition to the aforementioned BTC losses, cottage coins were hit the hardest. At the time of writing, Ethereum, the second-largest cryptocurrency by market capitalization, was trading at $1,325, down over 9%. dogecoin and Solana each posted double-digit losses of 11% and 13%, respectively, in the last 24 hours. The price drop shows that investors are risk-averse.