The crypto market faced heavy losses on Saturday and Sunday after Jerome Powell, chair of the Federal Reserve (Fed), signalled that they may continue to raise interest rates sharply in the coming months. Crypto market cap fell below the $1 trillion mark after staying above the mark for over a month.
“While higher interest rates, slower growth, and softer labour market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” Powell said at the Jackson Hole economic symposium.
The global stock markets reacted sharply to the announcement, but the impact was more pronounced in the crypto market. The total market cap of all the cryptocurrencies fell over $50 billion from $1.04 trillion on August 26 to $953 billion on Monday, according to data from coinmarketcap.com.
Bitcoin, the largest cryptocurrency by market cap, fell below $20,000. As of 1 PM on Monday, it was trading at $19,887. On August 26, it touched a high of $21,800 before closing at $20,199.
Ethereum, the second largest cryptocurrency, was at $1,453 on Monday. Before Powell’s speech on Friday, it was trading at $1,689, the market data showed.
Solana and Avalanche, other major cryptocurrencies, were down 13 and 20 per cent in the last seven days, respectively.
However, the market dominance of Bitcoin has stayed constant. It continues to hold over 39 per cent share in the total crypto market. Ethereum holds nearly 19 per cent of the total market share.