High inflation is also having a significant impact on cryptocurrencies with Bitcoin and Ethereum falling in the wake of the data of US inflation reaching a new 40-year high.
Ethereum fell by up to 5% to $1,445, the lowest level since March 2021, while Bitcoin fell as low as $27,264, the lowest level since May 12. Almost all of the top tokens tracked by Bloomberg fell on Sunday, with Dogecoin and Avalanche dropping more than 7%.
Inflation soars in the US
US inflation data on Friday exceeded expectations, dashing any hopes that the price rise may have peaked.
Stocks sank, while yields on two-year government bonds climbed to their highest level since 2008. Bitcoin and other cryptocurrencies have come under heavy pressure in recent months as the Federal Reserve raises interest rates.
The US inflation data help fuel the downward action through the weekend and “it is very likely that we will see this downtrend continue into next week, especially with the FOMC meeting coming up,” said Vijay Ayyar, vice president of corporate development and international at crypto platform Luno.
“If you look at the previous down markets, bitcoin has retreated around 80% or more normally, with altcoins typically doing 90% or more,” said Vijay Ayyar, an executive at Luno platform. “If this remains the case, we could see much lower prices for Bitcoin over the next month or two.”
Total long liquidations for cryptocurrencies were above $100 million for the third consecutive day on Sunday, following $258 million on Friday and $290 million on Saturday, according to Coinglass data.
The MVIS CryptoCompare Digital Assets 100 Index, which is weighted by market capitalization that tracks the performance of the 100 largest tokens, fell to its lowest level since January 2021.