Bitcoin (BTC) losses deepened over the weekend, with the leading cryptocurrency falling to its lowest level since late 2020 amid a series of sell signals.
Bitcoin has lost 20% in the last two days and is currently trading above $25,000. The market cap of the cryptocurrency has also dropped below $500 billion. BTC’s recent losses were triggered by US inflation data, while a mix of other negative indicators led to sharp selling over the weekend.
Rising inflation is expected to spur a larger-than-expected interest rate hike this week by the US Federal Reserve, creating more downside for Bitcoin.
A different issue in the DeFi space has worsened crypto sentiment.
Bitcoin traders fear Fed as inflation rises
The FED, which has been at the forefront of economic events this week, has a two-day meeting to begin on June 14. In light of high inflation figures, the focus will be on how much the central bank wants to raise interest rates.
Data from CME Group shows that 76% of traders have priced an increase of up to 75 basis points this week, bringing interest rates closer to pre-pandemic levels. Given that the move points to tightening liquidity conditions, it is expected to be extremely bearish for crypto markets. It also showcases a Fed that fears an impending economic shock. Avatrade chief market analyst Naeem Aslam had this to say about Bitcoin price:
“The weekend price action was brutal for cryptos and today’s price action is also not encouraging. BTC price has retested the 25,000 support level and we will likely see the price drop towards the critical price of 20,000.”
DeFi losses
The DeFi space appears to be facing a serious liquidity crunch, brought on by Celsius recently suspending withdrawals.
The problem stems from the pegging of Lido Staked Ethereum (stETH) causing panic selling on Ethereum. The losses in the second largest cryptocurrency far outweighed the losses in BTC.
The Celsius problem, coupled with losses in ETH, has caused widespread sell-off in the DeFi space. This worsened the sentiment towards the crypto market and also affected BTC prices.
You can check the price movements here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.