Ethereum fell as much as 7% on Wednesday amidst a broader Crypto market sell-off as traders navigated a turbulent market.
According to Messari, Bitcoin dropped almost 3% in less than thirty minutes this morning. In the meantime, altcoins are also declining, with Solana and Polygon falling by 8% and 5%, respectively.
Crypto Markets React to Central Bank Tightening
The Crypto markets have been sensitive to signs of central bank tightening, although the exact cause of the price decline is unclear.
The Federal Reserve has consistently increased interest rates for more than a year to combat decades of high inflation, and it is widely anticipated that it will increase rates by 25 basis points more next month. Overseas data from the consumer price index indicated that UK inflation remains above 10%, indicating that the Bank of England may need to increase interest rates further.
“After last month’s shocking CPI reading, today’s reading still indicates double-digit inflation,” Giles Coghlan, chief market analyst at financial services firm HYCM, said in a statement to Insider. This indicates that inflation is not yet back on track and that the longed-for decline to pre-Covid levels has not yet materialized. Coghlan added, “At this point, investors are unsure of the Bank of England’s next move.”
Read more: Inflation: Bank Of America CEO Warns Of Looming Economic Downturn
Bitcoin’s Price Rise in the Past Three Months
Other analysts stated that recent inflation data did not factor into the market decline. On an exchange, a large cryptocurrency holder, also known as a whale, sold a massive position.
Insider quoted Timothy T. Shan, COO of decentralized exchange Dexalot, as saying, “It may have been caused by a whale that sold approximately 16,000 BTC on Binance.” This resulted in a derisking of long positions including leveraged long positions across the market.
Following Ethereum’s most recent software upgrade, Alex Altgausen, CEO of the blockchain gaming startup Banksters, noted that Binance now permits withdrawals of staked ether.
Due to the implementation of ETH unstacking on Binance, the price of ETH decreased. People can now take and sell their profits after years of waiting, contributing to the price decline Altgausen told Insider.
After months of digital asset appreciation, volatility has returned to the market.
After its highly anticipated Shanghai upgrade, also known as Shapella last week, Ethereum reached its highest level in eleven months. Bitcoin’s price has risen 39% in the past three months and has reached a 10-month high.
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