Bitcoin slips below $25,000, lowest in 18 months; markets crash in Asia, Europe

Bitcoin tumbled Monday to an 18-month low under $25,000 as investors shunned risky assets in the face of a global markets selloff.

The world’s most popular cryptocurrency dived about 10 percent to hit $24,692 in morning London deals, striking a level last seen in December 2020.

Markets tumbled in Asia and Europe on Monday to extend a global rout while the dollar soared after a forecast-beating US inflation print ramped up bets on a more aggressive campaign of Federal Reserve interest rate hikes.

Fresh Covid outbreaks in Shanghai and Beijing have also seen authorities reimpose containment measures soon after lifting them, leading to fears about the world’s number two economy.

The possibility of more restrictions in China’s biggest cities weighed on oil prices, with concerns about a possible US recession and the stronger dollar adding to downward pressure on the black gold.

Investors were left surprised Friday when data showed US inflation jumped 8.6 percent in May, the fastest pace since December 1981, as the Ukraine war and China’s lockdowns pushed up energy and food prices.

The reading has led to fervent speculation that the Fed will now be contemplating a 75 basis point lift in interest rates at some point, though it is still expected to stick to a flagged half-point hike when it meets this week.

With the central bank forced to be more aggressive, there is a concern that the US economy could be sent into recession next year.

“For the last few weeks, there has been a cautious calm in markets — rates not pricing anything unforeseen, and equities able to make small gains,” said SPI Asset Management’s Stephen Innes.

“But the strength of (US consumer prices) completely upended that apple cart.

“The market is now thinking much more about the Fed driving rates sharply higher to get on top of inflation and then having to cut back as growth drops.”

And Bank of Singapore chief economist Mansoor Mohi-uddin added that officials would likely lift borrowing costs 50 basis points for the next four meetings and eventually push the overall rate to 4.0 percent in 2023.

(Except for the headline, this story has not been edited by The Kashmir Monitor staff and is published from a syndicated feed.)