Bitcoin Tumbles 5% as Dollar Spikes to 4-Week High

Crypto markets fell sharply on Tuesday morning, with Bitcoin on track to post its worst day since late April.

BTC is down 5% in the past 24 hours, changing hands for $66,600. Meanwhile, ETH, BNB and SOL plummeted between 6%% and 8%.

On Monday, Bitcoin ETFs saw outflows of $65 million, breaking their winning streak after 19 straight days of inflows.

All of the top 100 digital assets by market cap, barring stablecoins, are nursing losses today, according to CoinGecko. The memecoin sector has been especially battered, with WIF and FLOKI down 12% and PEPE down 4%.

On the DeFi front, Uniswap (UNI), Wormhole (W), Ethena (ENA) and DYDX are the day’s biggest losers, dropping more than 10%.

The U.S. Dollar Index (DXY) rallied for a third straight day ahead of tomorrow’s interest rate decision from the Federal Reserve. U.S. inflation figures for May are also expected tomorrow. A rising dollar is generally a headwind for risky assets like stocks and crypto.

Notwithstanding rate cuts from the European Central Bank (ECB) and Bank of Canada last week, the Fed is widely expected to leave rates unchanged tomorrow. The CME FedWatch tool indicates a 99.4% probability of such a move.

Investors will be hoping that tomorrow’s CPI report continues the trend of cooling inflation, which would give the Fed leeway to cut interest rates.

According to Coinglass, over 98,000 leveraged traders faced liquidation over the past 24 hours, wiping out more than $235 million of long positions.