Bitcoin (BTC) and altcoins lost big on Aug. 26 after the United States Federal Reserve delivered hawkish remarks on economic policy.
Across the board, risk assets took a major hit — U.S. equities shed around $1.25 trillion in a single session.
As comments by Fed Chair, Jerome Powell, suggested that larger rate hikes were still firmly on the table despite recent data hinting that inflation was already slowing, investors rushed to cut risk.
"Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy," Powell said at the annual Jackson Hole economic symposium.
The S&P 500 closed down 3.4% on the day, hitting its lowest levels since late July. The Nasdaq Composite Index copied the move and extended losses, shedding 4%.
Overall, the U.S. stock market lost more value than the entire market cap of Bitcoin and altcoins combined.
The total crypto market cap itself fell from $1.029 trillion to $936.87 billion at one point overnight, representing a drop of 8.95%, according to data from Cointelegraph Markets Pro and TradingView.
While some argued that Powell's words were not the essential area to consider in terms of future Fed policy, others noted that previous narratives were slowly being abandoned when it came to the inflation outlook.
Digital currency markets this weekend are feeling the pain as the global cryptocurrency market capitalization today is just under $1 trillion, down 4% during the last 24 hours. That was after the crypto economy shed more than 6% the 24 hours prior.
The crypto market’s major decline took place almost immediately after Fed chair Jerome Powell gave his speech at the annual Jackson Hole Economic Symposium on Friday.
Crypto Economy Slides Under $1 Trillion, as Bitcoin and Ethereum Dive Below Previous Support Zones
Coinmarketcap.com data shows that 20,756 crypto assets in existence are now worth less than $1 trillion in U.S. dollar value.
At the time of writing, bitcoin (BTC) is down 3.5% today and 4.5% over the last seven days and the leading crypto asset is trading for $19,968 per unit.
BTC fell to a daily low today tapping $19,766 per unit at 11:39 a.m. (EST). Ethereum (ETH), the second largest crypto asset by market valuation slid 5.1% on Saturday and lost 8.8% this week.
There is $67.44 billion in 24-hour global trade volume across the twenty thousand crypto assets in existence, but tether (USDT) commands $34.07 billion of the aggregate. Centre’s USD coin (USDC) has recorded $7.75 billion out of the $67.44 billion total as well. The volume between USDT and USDC represents 62.01% of today’s global trade volume.
|Trade With Our Recommended Broker ✅AssetsFX✅|
Bitcoin briefly dipped below $20,000 Saturday, extending its weeks-long losing streak. According to CoinGecko data, it’s down about 3.9% today and 18% over the past 14 days.
Bitcoin last dropped below the crucial $20,000 level in mid-July but has been hit by volatility in August. It’s currently trading at $19,996.
The world’s second-biggest cryptocurrency, Ethereum, also suffered as Bitcoin retraced. According to CoinGecko data, Ethereum is 7.6% down on the day, trading at about $1,475. Like Bitcoin, it’s had a rocky couple of weeks, shaving off about 24.7% of its market value.
Several other assets, including Layer 1 networks Solana and Avalanche and DeFi staples Uniswap and Aave, have also bled in the downturn.
A rally across the market throughout July and early August sparked hopes that the crypto market could be showing signs of life after a months-long slump.
Anticipation surrounding Ethereum’s Merge event was a particularly potent narrative among crypto traders, particularly after its September launch date was scheduled. However, recent activity suggests that the market has lost some of the confidence it found earlier in the summer.
The crypto market was having an uneventful week amid this late-summer doldrums—until Friday when the world’s leading cryptocurrency dropped 4% in the space of 24 hours.
The price plummet was triggered by Federal Reserve Chair Jay Powell's remarks in Jackson Hole that the Fed will keep raising interest rates as long as it takes to combat inflation. The comments sent stocks reeling as well, not just crypto.
To kick off the weekend, all of the top 10 cryptocurrencies by market cap are showing a net loss over the past seven days, except for Cardano (ADA), which is anticipating a hard fork coming next month.
Bitcoin (BTC) is down 5% in the past week, Ethereum (ETH) down 6%, Solana (SOL) down 10%, and Dogecoin (DOGE) 8%.
Ethereum supporters still have high hopes that the upcoming merge event will pump ETH. But this week, the number of weekly ETH deposits sent for staking on the Beacon Chain hit an all-time low, as per data from Dune Analytics.
The Beacon Chain is an Ethereum ledger that coordinates the network of Ethereum stakers. It has been running in parallel with Ethereum’s mainnet since its launch in 2020.
When Ethereum completes its upcoming major network overhaul next month, dubbed the “merge,” the mainnet will be merged with the Beacon Chain to make a fully proof-of-stake (PoS) Ethereum network.
Cryptocurrencies extended losses into the weekend after Jerome Powell warned against prematurely loosening policy, with Bitcoin dipping below the bottom end of the narrow range that it has traded in the past two weeks.
“Powell’s admission that there will be pain before there is relief is rather hawkish,” said Josh Olszewicz, head of research at digital asset fund manager Valkyrie Investments.
The largest cryptocurrency by market shed as much as 4% to $19,833 on Saturday as of 11:43 a.m. in New York, dipping below $20,000 for the first time since July 14 and extending its rout this year to 57%. It has traded in a range between that level and about $22,000 for the past week.
Ether slid as much as 6.4% to $1,456. Solana and Avalanche fared worse, dropping as much as 6.4% and 7.2%.
Powell, the Federal Reserve chairman, signaled the US central bank is likely to keep raising interest rates and leave them elevated for a while to stamp out inflation, and he pushed back against any idea that the Fed would soon reverse course.
Low rates are seen as one of the catalysts for pushing investor into crypto during the Covid lockdowns.