Crypto Crash: $1.4B Hack, Inflation Fears Drive Market Plunge

Cryptocurrency markets experienced a significant downturn on Tuesday, with stocks of major companies and digital assets plunging amid broader market concerns. The sell-off was driven by disappointing U.S. economic data and fears surrounding a billion-dollar hack on a prominent digital assets exchange.

Shares of trading platforms Robinhood and Coinbase closed down 8% and 6.4%, respectively, while Bitcoin treasury company Strategy plummeted more than 11%. Bitcoin miners Marathon Digital Holdings and Bitdeer plunged 9% and 29%, respectively. These declines followed a broader retreat from cryptocurrencies and other risk-on assets, reflecting investor concerns about potential global trade wars, rising inflation, and wider macroeconomic uncertainties.

Bitcoin, the largest cryptocurrency by market capitalization, was recently trading under $89,000, down by 7% in the last week. Since reaching an all-time high above $108,000, Bitcoin has fallen roughly 17% and dipped to nearly $86,000 earlier on Tuesday. Other cryptocurrencies, such as Ethereum, Dogecoin, XRP, and Solana, also experienced sharp declines but have since recovered some ground.

Last Friday, the 14th-largest crypto exchange by daily trading volume, Bybit, suffered an exploit, with hackers stealing $1.4 billion in Ethereum and related tokens from the trading platform. This hack, the largest crypto attack to date, contributed to Bitcoin's decline below $90,000 for the first time in three months.

U.S. inflation has been ticking upward, with the consumer price index increasing in January for its fourth consecutive month. The 3% annual CPI is higher than the U.S. central bank's long-targeted return to 2% inflation, prompting the Federal Reserve to adjust its plans for multiple interest rate cuts in 2025. Additionally, President Donald Trump's aggressive tariffs have unsettled markets, further contributing to investor concerns.