The cryptocurrency market faced a brutal Thursday as Bitcoin, Ethereum, and Dogecoin all tumbled following hotter-than-expected inflation data. With the Fed’s preferred inflation gauge climbing to 2.6%, investors rapidly adjusted their expectations about potential rate cuts – sending shockwaves through both crypto and traditional markets.
Ethereum News: Market Bloodbath as Inflation Fears Mount
The U.S. Personal Consumption Expenditures (PCE) price index surprised markets with a 2.6% year-over-year increase, exceeding the 2.5% forecast. This key Ethereum news triggered widespread selling across digital assets:
- Bitcoin dropped 2.17% to $115,531
- Ethereum fell 3.77% below $3,700
- Dogecoin plunged 5.72% to $0.2084
Bitcoin Drop Mirrors Stock Market Retreat
The crypto selloff coincided with declines in traditional markets:
| Market | Decline |
|---|---|
| Dow Jones | -0.74% |
| S&P 500 | -0.37% |
| Nasdaq | -0.03% |
Dogecoin Decline Highlights Altcoin Vulnerability
While major cryptos fell, the Dogecoin decline was particularly severe at 5.72%, demonstrating how meme coins often suffer most during risk-off periods. However, some altcoins bucked the trend:
- Toncoin (TON) rose 2%
- XDC Network gained 1.77%
- Story (IP) climbed 1.16%
Inflation Impact: What It Means for Crypto Investors
The inflation impact on cryptocurrency markets was immediate and severe, with over $570 million in long positions liquidated. Key takeaways:
- Rate cut expectations diminished significantly
- Crypto Fear & Greed Index showed weakening sentiment
- July gains helped cushion the blow (BTC +8%, ETH +48%)
Crypto Market Outlook: Short-Term Pain, Long-Term Potential?
Analysts remain divided on the path forward:
- Michaël van de Poppe predicts Ethereum could hit $4,000 before correcting
- Altcoins may see strong performance in 12-24 months
- Retail Bitcoin demand appears to be growing
While Thursday’s selloff was painful, the long-term fundamentals for major cryptocurrencies remain intact. Investors should watch inflation data closely and prepare for continued volatility as the market digests the Fed’s next moves.
Frequently Asked Questions
Why did cryptocurrencies drop today?
Cryptocurrencies fell after U.S. inflation data came in higher than expected, reducing hopes for Federal Reserve rate cuts which typically benefit risk assets like crypto.
How much did Bitcoin and Ethereum lose?
Bitcoin dropped 2.17% while Ethereum fell 3.77%. Dogecoin saw the largest decline among majors at 5.72%.
Will crypto prices recover?
While short-term volatility may continue, both Bitcoin and Ethereum had strong July performances (up 8% and 48% respectively), suggesting underlying strength.
What should investors do now?
Experts recommend dollar-cost averaging, focusing on long-term fundamentals, and maintaining a diversified portfolio to weather market fluctuations.
How does inflation affect cryptocurrency prices?
Higher inflation typically leads to tighter monetary policy, which reduces liquidity in financial markets and often pressures risk assets including cryptocurrencies.
Which cryptos performed well despite the drop?
Toncoin (TON), XDC Network (XDC), and Story (IP) all posted gains during the market downturn.
