(Bloomberg) — Bitcoin and Ether pared losses, after falling earlier on Sunday amid a broader retreat by the cryptocurrency complex in the wake of data showing US inflation hitting a fresh 40-year high.
Ether declined as much as 6.4% to $1,424.40, its lowest level since March 2021, while Bitcoin dropped to as low as $26,876.51, its lowest since May 12. Virtually all top tokens tracked by Bloomberg were down Sunday, with the likes of Dogecoin and Avalanche falling as much as 9.4% and 13% respectively. But they then showed some signs of life, rallying off their lows as of 11:45 a.m. Sunday in New York — and Ether even briefly made its way back to positive territory for the day.
US inflation data Friday topped expectations, dashing any hopes that rising prices may have peaked. Stocks sank while two-year Treasury yields climbed to the highest since 2008. Bitcoin and other cryptocurrencies have suffered in recent months as the Federal Reserve hikes rates and global policy makers step up efforts to combat price increases, and as risk assets like tech stocks retreat.
The inflation data is helping fuel the downward action and “very likely we see this bearishness continue on to the next week especially with the FOMC meeting coming up,” said Vijay Ayyar, vice president of corporate development and international at crypto platform Luno.
“If one looks at previous bear markets, Bitcoin has declined around 80%-plus normally, with altcoins typically doing 90%-plus,” said Ayyar. “If that remains the case, we could see much lower Bitcoin prices over the next month or two.”
Some analysts have said that if Bitcoin got below the high-$20,000s level, it might gap down quickly, with levels like the 200-week moving average near $22,000 and even the 2017 high at $19,511.
Total long crypto liquidations were above $100 million for a third straight day on Sunday, after $258 million on Friday and $290 million on Saturday, according to data from Coinglass. And the MVIS CryptoCompare Digital Assets 100 index, a market cap-weighted measure tracking the performance of the 100 largest tokens, fell to the lowest level since January 2021.
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