Cryptocurrency market capitalisation falls to January 2021 levels

Against a backdrop of sharp declines in most cryptocurrencies, the total market capitalisation fell below the $1 trillion mark.

As the chart below shows, the current figure of about $953 billion is comparable to the levels seen at the end of January 2021.

In the early hours of June 14, the figure dipped below the $900 billion mark.

Blofin analysts attribute the turbulence in financial markets to waning trust in risk assets amid accelerating inflation in the United States and the measures taken to tighten monetary policy.

2/8. From the data provided by the CME FedWatch Tool, the possibility of a 50 bps interest rate hike in Jun and a 75 bps interest rate hike in Jun is 67.8% and 32.2%, respectively. Also, the possibility of a 75 bps rate hike in July has already become 83.5%. @CMEGroup @4adybug pic.twitter.com/rPuIY5pU6k

— Blofin (@Blofin_Official) June 13, 2022

CME FedWatch data indicate a 67.8% probability of a 50-basis-point Fed rate rise in June, 32.2% that the rate will rise by 75 basis points, and 83.5% that it will rise by 75 basis points in July.

May inflation in the United States stood at 8.6% year-over-year, the highest since December 1981.

3/8. Higher-than-expected May inflation data on Friday rattled investors, and they were worried that rising inflation would make the economy into recession. The stock market was full of pessimistic sentiments, and thus it fell significantly today. @YahooFinance @ResearchVariant pic.twitter.com/C5DD7YCYnE

— Blofin (@Blofin_Official) June 13, 2022

“The higher-than-expected readings unsettled investors. They were concerned that rising inflation would push the economy into a recession,” Blofin experts said.

4/8. 2-year U.S. Treasury yields rose above 3.22%, the highest level since 2007, and it was briefly higher than the 10-year yield as investors bet the Fed may have to take more aggressive steps to curb inflation. This yield curve inversion was seen as an indicator of a recession. pic.twitter.com/ljsNT6VSyE

— Blofin (@Blofin_Official) June 13, 2022

The two-year Treasury yield rose to 3.22%, the highest since 2007. It briefly surpassed the 10-year Treasury yield.

Investors are likely concerned that the Fed will take more aggressive steps to curb inflation. The yield curve inversion usually signals a coming recession.

At the time of writing, Bitcoin was trading around $22,390 and Ethereum near $1,220, according to CoinGecko. Price declines from their all-time highs stood at 67.4% and 74.9%, respectively.

Former BitMEX chief Arthur Hayes noted a significant concentration of open interest in Deribit options at the $20,000 and $1,000 levels for Bitcoin and Ethereum respectively. He said that a fall below these levels could exert substantial selling pressure on the spot markets.

On June 13, Bitcoin fell by more than 17% in a day, slipping below $23,000.

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