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Bitcoin dropped sharply on Monday, shedding over 5% of its value in 24 hours as traders sold off "risk assets" days ahead of the consumer price index (CPI) report for April.
The biggest cryptocurrency by market cap was at the time of writing trading for $27,408, according to CoinGecko. Only one month ago, Bitcoin reached a 10-month high in April when it bolted past $30,00
But it has now erased those gains and is down 6.7% in the past week.
It has taken the rest of the market with it, too: Ethereum, the second biggest cryptocurrency, is down more than 5% in the past day and is priced in at $1,826.
All of the major cryptocurrencies were also in the red in the past day: Dogecoin dropped by 7% in 24 hours to touch $0.07, while Polygon took a 8.6% hit and was trading for $0.89.
On Wednesday, investors will look to the CPI report to gauge the Federal Reserve’s progress in bringing down inflation. The index tracks price movements across a broad range of goods and services.
Investors have typically sold "risk assets"—investments that experience volatile price movements—when the the Fed has aggressively raised interest rates to tame inflation.
Bitcoin has closely been related to the U.S. equity market (largely tech stocks) and has dipped in price whenever America's central bank has tightened monetary policy. Although many investors have cheered for Bitcoin's decoupling from stocks a few times over, it hasn't happened yet.
Global asset manager BlackRock said Monday that riskier assets may continue to take a beating this year as central banks around the world would continue to up interest rates to battle sky-high inflation.
But with a banking crisis this year and fears of an incoming recession, investors have looked to the biggest and oldest cryptocurrency as a safe-haven, some experts told Decrypt.
As a result, the asset is up considerably since the start of the year, when it was trading for just $16,615.