Crypto markets have shed a further 3.3% on the day in terms of total market capitalization, which has now fallen to $1.70 trillion. Over the past 12 hours, an additional $116 billion has left the space as the selloff continues. The total market cap is now at a six-month low, having dropped back to levels last seen in early August. Since the beginning of 2022, crypto markets have declined by 26%, equating to around $600 billion exiting the space.
Bitcoin declined by 4.4% as it dropped to $35,700.
Bitcoin is leading the slump with a 4.4% decline to $35,776, while Ethereum has lost a similar amount in a fall to $2,371, according to CoinGecko. The rest of the crypto market is a sea of red at the time of writing, with Solana, Terra, Polkadot, and Avalanche taking bigger hits of 8-10%. The selloff has been triggered by the latest announcement from the U.S. Federal Reserve. On Jan 26, the U.S. central bank stated that it would begin a series of interest-rate hikes in March.
Inflation is currently at a four-decade high in the U.S.
The Federal Reserve’s decision to increase interest rates is part of a wider effort to reverse pandemic-induced policies that have caused painfully high inflation rates. In America, inflation is currently at a four-decade high of 7% (way above the Fed’s 2% target), which is hurting consumers. Increasing interest rates is one way that the Fed can combat this runaway inflation. Fed Chair Jerome Powell said that “raising the benchmark rate, which has been pegged at zero since March 2020, will help prevent high prices from becoming entrenched,” according to reports.