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Crypto Flash Crash Wipes Out Billions

Prices of many significant crypto tokens fell by nearly 7% in overnight trading.

Cryptocurrencies across the board witnessed a wide selloff on Tuesday with prices of some of the most popular tokens like Bitcoin, Ethereum, XRP, Solana and Dogecoin all declining sharply.

The price of Bitcoin fell 6.2% over the last 24 hours to $60,637.8 according to CoinGecko, a price-tracking website for crypto assets. 

Bitcoin closed Monday's trading session at $63,864, nearly 5% higher.

Prices of Ethereum (ETH), XRP, Binance (BNB), Solana and Dogecoin fell 6.8%, 7.2%, 7.7%, 6.8% and 7.1%  in overnight trading, respectively.

"Of the four most valuable cryptocurrencies by market capitalization ether fell 9.6% to around $4,300, Binance’s BNB 8.9% to $590, solana 7.5% to $225 and cardano 9% to $1.90," Forbes reported earlier on Tuesday.

A report in The Wall Street Journal attributed the fall in the crypto market to a stronger dollar. The dollar hit its strongest point against the euro since July 2020 last week, to touch 95.197.

“A lot of people view crypto as a risk-on investment,” Martha Reyes, head of research at Bequant, a digital-asset brokerage and exchange told the Journal.

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The crypto crash comes less than a week after bitcoin rallied to a new record high, to touch nearly $69,000.

The global cryptocurrency market cap dropped 6.1% to $2.78 trillion, according to data from CoinGecko, wiping out roughly $169.5 billion according to back of the envelope calculations.

Inflation in the world's biggest economy grew at its fastest pace since 1990 in October. 

The U.S. central bank has said it will begin slowing the pace of its $120 billion in monthly bond purchases later this month.

Fed chair Jerome Powell, however, said the Fed will be "patient" in terms of interest rate hikes, but would not hesitate to act if a response against faster inflation were needed. 

Last week, markets regulator Securities and Exchange Commission rejected a proposal to list the country's first bitcoin exchange traded fund, VanEck, because it did not meet trading standards “designed to prevent fraudulent and manipulative acts and practices."