As inflation does not decrease as quickly as anticipated, the price of bitcoin drops by 4%, triggering a sell-off in the cryptocurrency market.
On September 13, Bitcoin quickly fell below $22,000 after US inflation data disappointed forecasts.
Major Crypto Plunge Sparked by CPI Figure
Following the release of the Consumer Price Index (CPI) inflation figure for August, which came in at 8.3% year-over-year, data from Cointelegraph Markets Pro and TradingView revealed a sharp $1,000 decline in BTC/USD.
The overshoot indicated that inflation was not dropping at the anticipated rate despite the assumption that the most recent figure would be 8.1%.
However, compared to July, the year-on-year increase was still down 0.2%, maintaining the general trend of slower CPI inflation.
To prevent a crypto rout, this was insufficient, and at the moment of writing, Bitcoin was trading below $21,500, down 4% for the day.
Cold feet were becoming more evident before the opening of Wall Street as market participants raised their wagers on a further 75-basis-point and perhaps 100-basis-point rate hike from the Federal Reserve next week.
The CPI news caused a brief comeback in the strength of the U.S. dollar index (DXY), which often represents headwinds for cryptocurrencies. It passed 109 for the first time since September 9 as a result.
On altcoins, Ether’s suffering persisted as the decline in Bitcoin exacerbated its already-existing weakness.
The largest altcoin by market cap failed to take advantage of the surrounding buzz, therefore ETH/USD and ETH/BTC both prolonged losses despite the upcoming Merge event.