The price of Bitcoin (BTC) briefly slipped below $21,000 in the early hours of Tuesday morning, a 52-week low for the world’s largest cryptocurrency by market capitalization.
Bitcoin dropped to lows of $20,950, according to data from CoinMarketCap, before recovering to its current price of around $22,620, down over 6% on the day.
With a current market capitalization of $430 billion, Bitcoin is down over 66% from its all-time high of $68,789 recorded in November 2021.
Bitcoin leads liquidation in the cryptocurrency market with $531.62 million liquidated over the past 24 hours, according to data from Coinglass.
The Bitcoin fear and greed index hit 8 out of 100, its lowest level since May 2022, suggesting extreme anxiety in the market.
Earlier today, Ethereum (ETH), the second-largest cryptocurrency, dropped to $1,094.70, also recording a 52-week low. Ethereum is currently trading at $1,220, up 1.3% on the day.
Why did Bitcoin crash?
The primary reasons behind today’s bearish price actions are growing global inflation rates and rate hikes by the U.S Federal Reserve.
The U.S. inflation rate hit a 40-year high of 8.6%, but America isn’t alone. Rising prices are a global phenomenon, with all significant economies facing inflation.
The inflation rate of European countries including Germany (7.9%), France (5.25%), Netherlands (8.8%), and the United Kingdom (9%), shot up in May 2022.
Turkey is the worst-hit G20 nation, with inflation rates soaring past 73.5%, according to data from Trading Economics.
The increasing inflation rate globally is fueled by the rising fuel costs and changing supply-chain dynamics resulting from Russia's ongoing invasion of Ukraine.
In order to control inflation, the Fed is expected to implement a 0.75% percentage point rate hike, which in turn would tremendously increase bond yields, according to the Wall Street Journal.
The Fed will conduct a meeting to discuss the issue today, with an announcement expected to follow tomorrow if the planned rate hike goes through.
Of the top 10 cryptocurrencies, Cardano (ADA), Solana (SOL) and Dogecoin (DOGE) have shown gains over the past 24-hours. SOL and ADA are both up over 14%, while DOGE is trading slightly higher by 5.6% over the same period.