Bitcoin drops 9% on the day on inflation fears

Bitcoin (BTC), the industry’s largest cryptocurrency by market capitalization, fell 9% on Wednesday, erasing most of its recent gains.

After the official announcement of the US Consumer Price Index (CPI) on Tuesday Bitcoin price It fell to a six-day low of $20,062, before rising to around $20,380 at the time of writing, according to data from CoinMarketCap.

While analysts believe the CPI could be 8.1% compared to August 2021, the CPI was 8.3%, 0.2% higher than expected.

Some industry leaders hoped the recession would be short-lived, but not all expectations came true.

“Bitcoin fell on news that inflation for August came in higher than expected (8.3% instead of 8.1%). Bitcoin should rise today. Its characteristics dictate that it should correlate inversely with inflation,” wrote Tyler Winklevoss, co-founder of Gemini Currency Exchange. Crypto, on Tuesday, that the fact that it has fallen shows how early it is.

As investors anticipate higher interest rates in the coming months, traditional financial markets have also pulled back. The Dow lost 1,276 points, or 3.94%, at Tuesday’s close, while the Nasdaq was down more than 5%.

More blood in the market

Elsewhere in the market, Ethereum (ETH), which is less than a day away from the long-awaited merger that will transition to the Proof of Stake (PoS) consensus mechanism, is down nearly 7% on the day, trading just over $1,600 at press time.

Meanwhile, many of the top cryptocurrencies posted double-digit losses, helping push total market capitalization below $1 trillion.

These include the ninth largest coin Solana (SOL), which is down 12.6% in the past 24 hours, and Avalanche (AVAX), which lost 11% of its value in the same time frame.

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