Markets: Bitcoin, Ether drop on CPI report, Solana biggest loser, Dogecoin back in top 10

Lachlan Keller

2 years ago

Bitcoin fell almost 10% with Ether close behind in Wednesday morning trading in Asia as the August U.S. consumer price index, a key inflation indicator, came in higher than expected overnight, driving down equity markets and pointing to more agressive interest rate increases by the Federal Reserve. All cryptocurrencies in the top 10 by market capitalization fell.

See related article: Bitcoin drops 4% after U.S. August CPI rises 0.1% from July

Fast facts

Bitcoin fell 9.8% in the past 24 hours to trade at US$20,184 at 8 a.m. in Hong Kong, erasing most of the gains from the past five days, while Ethereum dropped 8.1% to US$1,574, according to data from CoinMarketCap.
Solana saw the biggest losses in CoinMarketCap’s top 10, falling 11.8% to US$33.02. XRP and Cardano were also hit hard, both losing over 7.3% to bring Cardano to US$0.464 and XRP to US$0.33. Dogecoin rejoined the top 10, losing 6.6% to change hands at US$0.059, but overtaking Polkadot on the list which fell 7.7% to US$7.07.
The U.S. Bureau of Labor Statistics reported on Tuesday that inflation rose 0.1% from July, compared with market expectations for a 0.1% decline. Gasoline prices fell 10.6% in the month, but this was offset by elevated costs for food, rent, healthcare, electricity and natural gas. Food prices surged 11.4% from August last year, the largest 12-month increase since May 1979.
August inflation was up 8.3% on year, driven in part by supply chain shortages across multiple industries caused by Russia’s invasion of Ukraine and China’s commitment to a zero Covid policy, which has shut down large portions of the country’s manufacturing capacity.
Investors were expecting the Fed to raise interest rates by 75 basis points at its meeting on Sept. 20-21, but following the CPI report the likelihood of a 100-basis-point hike has risen to 33%, which would be the largest since 1984. Interest rates in the U.S. are currently 2.25% – 2.5%.
U.S. equities fell sharply on Tuesday after the report to post the worst day of trading since June 11, 2020. The Dow Jones Industrial Average lost 3.9%, the S&P 500 closed 4.3% lower, while the tech-heavy Nasdaq Composite Index took the brunt of the selling to drop 5.1%. Asia stock markets were lower across the board in early trading on Wednesday morning.