Bitcoin plunged below the $27,000 level as a massive sell-off in the cryptocurrency space erased hundreds of billions in crypto market value.
The price of Bitcoin plummeted 8.76% to $26,848.20 as of Thursday morning, according to data from Coin Metrics. Ether slumped 13% to $1,832.33.
Cryptocurrencies’ dramatic price crashes echoed stocks after the Bureau of Labor Statistics reported consumer prices for the month of April jumped 8.3%, which was slightly higher than expected by economists polled by Dow Jones.
Consequently, investors were scared, rushing to exit risk assets, including crypto. Cryptocurrencies remain highly correlated with the S&P 500 and, more recently, the Nasdaq Composite.
“The crypto market has been under pressure for some time now,” said Michael Rinko, venture associate at AscendEx. “The Fed keeps hiking, so equities keep going down and crypto’s been going down along with it. Generally, that’s created a lot of fear in the market.”
This isn’t the first time that Bitcoin fell below $29,000 this week. Analysts said that $30,000 is a key level for the largest cryptocurrency by market value, and said it could fall even further if it can’t hold there.
Investors are also dazzled after the big news from the Terra project, whose suddenly popular stablecoin TerraUSD crashed almost 100% at one point in the past week, breaking its $1 peg. The decentralized, algorithmic stablecoin is meant to be backed by a combination of digital assets, including bitcoin.