The crypto market is worth less than $1 trillion for the first time in 16 months as major coins plunge

• The cryptocurrency market fell below a $1 trillion valuation on Monday.
• The market has largely tracked stocks this year, which themselves have been slammed by rate-hike worries.

A fresh sell-off in cryptocurrencies pulled the total value of the market to its lowest in more than a year on Monday, with the latest US inflation shock sending investors fleeing from so-called risk assets.

The value of the cryptocurrency market fell below $1 trillion for the first time since February 2021, according to CoinMarketCap, which tracks more than 19,000 crypto prices.

The most prominent, bitcoin, tumbled 13% to trade at $23,693, falling below $24,000 for the first time since December 2020.

The market's second-most valuable coin, ether, which runs on the ethereum blockchain, was slammed 15% lower to $1,249.25. ADA, the native token of the Cardano blockchain, lost 7% to trade at $0.461 and DeFi coin Solana sank 10% to $27.60.

The cryptocurrency market has been yanked down from a roughly $3 trillion valuation reached last November, undergoing a so-called crypto winter where prices for bitcoin and other tokens have struggled to gain upside traction. Bitcoin has dropped 65% from its all-time high of $69,044.44.

The crypto market this year has largely tracked movement in the stock market, which itself has sold off largely as the Federal Reserve has signaled a plan to aggressively raise interest rates to cool down hot inflation. Stocks were hammered on Monday after Friday's May inflation report showed prices over a 12-month period have shot up to a record rate of 8.6%. The S&P 500 was getting closer to returning to a bear market.

The inflation report arrived before the Fed delivers its next policy decision on Wednesday. Policy makers are expected to kick up the fed funds rate by 50 basis points but the May report prompted Barclays to project an increase of 75 basis points. The Fed has raised interest rates by 75 basis points since March to a range of 0.75% to 1%.

The crypto space "is on the verge of a reckoning now that the gloves are off around global inflation and the realities of a new world where fixed interest actually pays a yield – albeit one still deeply negative in real terms," Jeffrey Halley, senior market analyst at forex broker Oanda, in a note.