Bitcoin fell below $22,000 early Friday, reversing gains spurred by the softer-than-expected U.S. inflation figure released earlier this month.

The leading cryptocurrency by market cap fell over 6% to as low as $21,500, the least since July 27, CoinDesk data show. The biggest single-day percentage decline in a month marked a continuation of the five-day downtrend that began near $25,000. Ether, the native token of Ethereum’s blockchain, declined 6% to $1,730, while the likes of SOL, ADA and DOGE suffered double-digit losses, according to CoinDesk data.

In traditional markets, the futures tied to Wall Street’s tech-heavy Nasdaq slipped over 1% and the dollar index rose to a one-month high of 107.77, indicating risk aversion.

Sentiment worsened perhaps due to push back from Federal Reserve (Fed) against expectations that inflation has peaked and the central bank would slow the pace of interest-rate increases in the U.S. and as well as adopt looser monetary policies in 2023. The minutes of the July Federal Reserve’s meeting released Wednesday showed policymakers discussed the need to keep interest rates at levels that would weigh over the U.S. economic growth.

“USD strength, especially post Fed minutes seem to be putting downward pressure on crypto, although the magnitude and velocity of today’s selloff suggests that it might be a liquidation hunt on complacent, leveraged long positions,” Dick Lo, CEO and founder of quant-driven trading firm TDX Strategies, said.

Bitcoin prices recently climbed to almost $25,000 from $22,800 in hopes that the Fed would cut rates in 2023. Stocks also marked higher with Nasdaq reaching a 3.5-month high of $13,370 on Wednesday. Bond yields, however, have remained resilient in the wake of the Aug. 10 consumer price index (CPI) data, a signal that bitcoin traders might be wrong in making dovish assumptions. The U.S. 10-year Treasury yield rose to 2.95% today, the highest since July 21, extending the rally from the post-CPI low of 2.63%.

“Risk markets were due for a pullback after an impressive rally,” Lo added, citing profit-taking as one of the reasons for the drop in ether.

Laurent Kssis, managing director and head of Europe at crypto exchange-traded fund firm Hashdex, said long liquidations in ether have reached levels not seen in two months. Long liquidations refer to forced the unwinding of bullish futures market positions by exchanges on account of margin shortages. Per coinglass.com, $117 million worth of ether long positions were liquidated today, the highest since July 28.

Aside from the risk reset in traditional markets, the optimism about Ethereum’s long-pending technological upgrade, dubbed “the merge” helped crypto markets regain poise over the past two months. Ether doubled to $2,000 in the four weeks to Aug 14.

Lo sees more pain ahead for the crypto market if bitcoin fails to hold support at $21,500. “A break below could see 20,700 as the next level of support,” Lo told CoinDesk. ING analysts foresee tightening of the financial conditions heading into the Fed’s September meeting, implying renewed volatility in risk assets.

(10:42 UTC): Adds quote from TDX Strategies’ Dick Lo and Hashdex’s Laurent Kssis. Also adds commentary on performance of alternative cryptocurrencies and traditional markets.