Cryptocurrencies have experienced what’s being called a “flash crash,” erasing the gains seen after U.S. Federal Reserve Chair Jerome Powell’s recent comments on interest rates.
The price of Bitcoin (BTC), the world’s biggest cryptocurrency, fell nearly 3% early on Aug. 25 to trade at $111,185 U.S.
Ethereum’s decline has been more pronounced, with the second largest crypto by market capitalization falling 5% to $4,600 U.S.
The fall in Ethereum comes after the cryptocurrency surged 15% on Aug. 22 to reach $4,885 U.S., its first new all-time high since 2021.
Smaller cryptocurrencies such as XRP (XRP), Solana (SOL), and Dogecoin (DOGE) are each down sharply on Aug. 25 as selling pressure on digital assets mounts.
The weekend reversal comes after crypto prices surged following Fed Chair Powell’s speech at the Jackson Hole Economic Symposium, where he signalled coming interest rate cuts.
Lower interest rates spur investors’ appetite for risk assets such as stocks and crypto.
Equities also rallied hard after Powell said the U.S. central bank is now likely to ease its monetary policy and pivot towards favoring lower interest rates.
The blue-chip Dow Jones Industrial Average closed at an all-time high on Aug. 22.
In terms of the crypto selloff, news outlets are reporting that a “Bitcoin whale,” an individual or entity that holds a large amount of the token, has begun selling, triggering the flash crash.
Bitcoin is now up 19% on the year.
