The Bitcoin (CRYPTO: BTC) price is in freefall, down 16% since this time yesterday.
At the time of writing the world's top crypto by market cap is trading for US$22,187 (AU$31,737). You need to go back to December 2020 to find the crypto trading any lower.
With the latest falls factored in, the Bitcoin price is now down 53% this year and down 68% from its 10 November all-time highs. That's seen the total market value of the token slide from more than US$1.3 trillion at the peak to US$426 billion today.
Why is the Bitcoin price tumbling?
The Bitcoin price is coming under pressure on two fronts.
The biggest driver looks to be the higher than expected inflation figures released by the United States on Friday.
The world's largest economy is seeing inflation climb at the fastest rate in four decades. The May figures came in at 8.6%. That's up from 8.3% in April, dashing hopes that inflation may have peaked. And stoking fears that the US Federal Reserve will pursue aggressive tightening.
The Fed meets this Wednesday (night time for us), and is widely expected to hike rates by another 0.50%. But after the latest inflation data, more analysts are forecasting an outsized 0.75% rate hike.
That's seen risk assets, like high growth tech shares, come under a new round of selling pressure. The Nasdaq closed down 4.7% yesterday while the S&P/ASX All Technology Index (ASX: XTX) is down 6.7% in morning trade today. (The ASX was closed yesterday for the Queen's Birthday holiday.)
Cryptos have been trading in line with risk assets all year and the current sell-off is no exception. And it's not just the Bitcoin price dropping hard. Most all of the top cryptos are well into the red today.
What else is pressuring the crypto markets?
Putting additional pressure on the Bitcoin price was news that global crypto lender Celsius Network paused trading over the weekend.
As Bloomberg reports, speculation has been rife that Celsius might not be able to meet the promises it's made on high yielding returns for some products, which run up to 17%.
Celsius (CRYPTO: CEL) is currently trading for 27 US cents. That's down 28% over the past 24 hours and down 60% since Friday.
According to Vijay Ayyar, vice president of corporate development Luno:
The Celsius news added fuel to the fire, adding to the uncertainty in the market. There is a lot of pressure on prices as we go into the week of Fed decision coupled with concerns on the protocols offering high-yield products.
And looking ahead, Steven McClurg, co-founder of Valkyrie Investments cautioned that the Bitcoin price and other cryptos could have further to fall.
"The fundamentals to support stabilisation and recovery just aren't there. Things can and likely will get worse before they get better," he said.
