From a peak of over $4.02 trillion, the overall cryptocurrency market cap has experienced a significant decline, now sitting at approximately $3.98 trillion following a sharp price drop. This downturn, amounting to a loss of $133 billion, has been attributed to recent comments from U.S. Treasury Secretary Scott Bessent, along with the release of the U.S. Producer Price Index (PPI) data earlier this week, which indicated rising inflation.
### Crypto Prices Experience a Decline
The latest PPI report revealed its largest increase in three years, reflecting a rise in the costs of various goods and services. This data has suggested a potential uptick in inflation, posing a challenge for the Federal Reserve. As a result, expectations for aggressive interest rate cuts in September have diminished. The unexpected spike in the PPI has left investors unsettled, leading to a notable downturn in the crypto market. The market’s $133 billion loss marks the most significant liquidation event since early August, pushing the overall market cap down to $3.98 trillion as traders capitalized on profits from Bitcoin’s recent price surge.
Bitcoin (BTC), which had soared to an all-time high of $124,474, has seen its price drop to around $118,133.73. This downward trend is not limited to Bitcoin; Ethereum (ETH), which was nearing the $5,000 mark, has fallen to approximately $4,558.81. Meanwhile, XRP has decreased by 0.44%, now trading at $3.09, and Solana (SOL) has slipped from over $201 to around $191.01, reflecting a 2% loss in the last 24 hours. Additionally, the CoinDesk 20 Index, which tracks the largest cryptocurrencies, has declined by 2.1%. These price fluctuations have resulted in substantial liquidations, with over $1 billion in leveraged trading positions being wiped out within a single day. Long traders have been the most affected by these liquidations.
### U.S. Treasury Secretary Clarifies Bitcoin Purchase Plans
Former hedge fund manager and current U.S. Treasury Secretary Scott Bessent has made comments that may have contributed to the recent downturn in Bitcoin’s value. In a recent interview with Fox Business, Bessent stated that the U.S. government has no intentions of making further Bitcoin purchases for its strategic reserve or digital asset holdings. He noted that while the government has initiated a Bitcoin reserve, it will not be looking to buy more but will instead rely on confiscated assets to build that reserve.
Bessent mentioned that the current value of the U.S. Bitcoin reserve stands between $15 billion and $20 billion, based on Bitcoin’s price around $120,000 at that time. Following his remarks, Bitcoin’s price saw a sharp drop. Despite his subsequent efforts to convey a more positive outlook for Bitcoin through a post on X, the market has not yet rebounded from the selloff. The Bitcoin that is forfeited to the federal government is intended to be a component of the Strategic Bitcoin Reserve established by President Trump’s executive order in March.
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