The price of Bitcoin declined almost 7% on Tuesday as higher-than-expected inflation in the US caused fears that the Federal Reserve could adopt a tougher stance in its monetary policy.
The world’s largest crypto by market size saw its price hit $20,678 at 12.31 p.m. EDT. It was trading around $20,755 for a 7.3% daily loss at 1.55 p.m. EDT.
The price climbed to $24,918 on Aug. 11 — its highest in two months, while it has since failed to surpass the resistance level of $25,000.
Ethereum, the world’s biggest altcoin by market value, dove to $1,590 but recovered to $1,632 for a 6.1% daily decline.
The value of the cryptocurrency market stood at just above $1 trillion at 1.55 p.m. EDT — a daily decrease of 4.6% — as some altcoins saw a more than 8% decline in value.
The sudden decline in the crypto market came with losses in the US stock market, especially the tech-heavy Nasdaq, of which cryptocurrencies are highly correlated to in recent months.
The Nasdaq was down 473 points, or 3.86%, to 11,794 at the time.
Consumer inflation in the US posted an annual gain of 8.3% in August, coming in higher than the market estimate of an 8.1% annual increase, according to Labor Department figures.
That triggered worries that the Fed could adopt a more hawkish approach in its monetary policy after its two-day meeting on Sept. 21, which may push liquidity in the markets even lower.