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Bitcoin Falls Biggest Since June Plunge; Ether collapses before melting

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(Bloomberg) – Bitcoin fell more than 10%, the biggest drop since cryptocurrencies fell in June, as widespread selling off in financial markets spread to the digital asset sector.

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Ether fell nearly 9% to $1,571 even as its underlying Ethereum network is about to undergo a long-awaited power-saving software upgrade. Tether, the largest so-called stablecoin, was the most traded token on Tuesday as investors seek protection from sector volatility. Other stablecoins such as Binance USD and USD Coin have also seen an increase in volume.

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US stocks fell and Treasury yields soared after warmer-than-expected inflation data fueled bets on a massive Federal Reserve hike next week.

“Today’s dump in crypto markets is about the US CPI,” said Teong Hng, managing director of crypto investment firm Satori Research.

Bitcoin fell 11% to $20,056, the biggest intraday decline since the largest cryptocurrency by market value fell 15% on June 18 following the collapse of crypto lender Celsius. Bitcoin is down around 56% this year.

Ether-based investment products saw outflows of around $62 million last week, accounting for the bulk of liquidity drawn from digital asset vehicles, according to data from CoinShares.

In the derivatives market, more and more crypto traders are selling Ether ahead of Ethereum’s biggest technical upgrade.

“The ETH merger was not an event today,” said Kevin March, founder of Floating Point Group, a crypto trading platform provider.