The Bitcoin (CRYPTO: BTC) price cratered overnight, falling as much as 11% to hit US$35,612.
At time of writing, the world's biggest crypto by market cap is down 9% over the past 24 hours, currently worth US$36,509.
The last time the Bitcoin price fell as much in a single day was when Russian troops crossed into Ukraine, sending global markets into turmoil in late January.
And it's not just Bitcoin. CoinMarketCap tells us that all but one of the top 100 cryptos by market cap are well into the red today (stablecoins aside).
So, what's going on?
Bitcoin price succumbs to rate fears
The finger of blame looks to be pointing squarely at surging global inflation figures. Figures that are forcing central banks the world over to begin ratcheting up interest rates more aggressively than most analysts had expected.
The US Federal Reserve restrained itself this week with a 0.50% rate hike rather than the feared 0.75%. But investors are all too aware that further rises are just around the bend from the Fed and other central banks the world over.
Following a big relief rally on Wednesday, yesterday (overnight Aussie time) US markets tanked. The tech-heavy Nasdaq led the way down, plummeting 5%.
And as we've seen throughout this year, the Bitcoin price tends to move in close alignment with risk assets like high growth tech shares.
What the experts are saying
Commenting on the crypto rout, Jason Lau, chief operating officer of Okcoin exchange said (quoted by Bloomberg), "Investors are jittery about the Fed continuing to raise interest rates after yesterday's 50 bps hike. The potential of additional rate hikes makes the trajectory of the global economy uncertain."
Digital asset fund manager Valkyrie Investments head of research, Josh Olszewicz added:
Bitcoin has become increasingly correlated with US trading hours and US traditional market indices, likely due to a combination of increasing US institutional presence as well as the absence of China after the sweeping bans last year.
Since March this year, most of the large selloffs in Bitcoin have kicked off during US market open, potentially suggesting a market participant continues to sell every bullish rally.
Following the latest round of selling, the Bitcoin price is down 23% so far in 2022.
