Bitcoin, Ethereum, Dogecoin Crash After 'Scorching' Inflation Data: Analyst Says 'Writing Was On The Chart'

Bitcoin and Ethereum traded sharply lower Tuesday evening as the global cryptocurrency market cap plunged 7.5% to $986.4 billion at 8:26 p.m. EDT.

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Why It Matters: Major cryptocurrencies dropped after the U.S. Labor Department posted the inflation numbers for August, which indicated the consumer price index rose 8.3% year-over-year. 

Even though inflation cooled off compared to the 8.5% rise in July, it came above average economist estimates of 8%.

Stocks tumbled on Tuesday, with S&P 500 and Nasdaq losing 4.3% and 5.2%, respectively. U.S. stock futures were flat at the time of writing.

“A scorching inflation triggered a stock market selloff that is also dragging Bitcoin along for the ride," said Edward Moya, a senior market analyst with OANDA, according to a note seen by Benzinga.

"Hopes of a soft landing, the end of the Fed hiking cycle, and a resilient consumer, are fading away. Bitcoin’s plunge reminded traders it remains the ultimate risky asset and is vulnerable if stock market selloff deepens.”

Justin Bennett, who had warned investors not to get “too comfy” yesterday, tweeted that the “writing was on the chart” for cryptocurrencies and stocks.

The trader warned that he thinks we’ve still not seen the lows for Bitcoin. 

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Michaël van de Poppe said that the markets are pricing in a 100 basis point rate hike by the U.S. Federal Reserve for September.

The cryptocurrency trader said, “Worst is getting priced in.”

Meanwhile, the number of Bitcoin addresses with 10 or more BTC has shot up since February, said Santiment.

“Over these past 7 months, the amount of these shark and whale addresses is up 3.6% on the network, and is back to its highest level in 19 months,” said the market intelligence platform.

On the Ethereum side, the buzz surrounding the coin’s shift to a proof-of-stake continues to be intact. Stripe CEO Patrick Collison said Tuesday that the "Merge" was “one of the coolest examples of sustained, ambitious, technically difficult open source development.”

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