Bitcoin, Ethereum and other major tokens collapsed late Wednesday, with the global cryptocurrency market capitalization falling more than 6.4 percent to $1.2 trillion.

Why It Matters: Cryptocurrencies dropped sharply in line with stocks, which crashed on inflation worries and worse-than-expected retail earnings Wednesday.

The Dow closed more than 1,100 points lower or 3.6% to 31,490.07 on Wednesday. The S&P 500 and the Nasdaq ended the day 4% and 4.7% lower respectively.

The yield on the benchmark 10-year bond slid below the 3% mark on weak U.S. housing starts number, a harbinger of weakening growth.

The market believes there is a 4.5% chance of no more 50 basis point hikes after July and a 36% chance of 1 more 50 basis point hike after July,

“Bitcoin was dragged down alongside most risky assets as Wall Street suffered the worst loss in almost two years. ​ Bitcoin remains a risky asset and vulnerable to further pain if the de-risking continues tomorrow,” said Moya, in an emailed note seen by Benzinga.

Cryptocurrency markets face systemic issues with stablecoins beyond the macro fundamentals. Glassnode tweeted that aggregate stablecoin supplies have dropped by a total of $8.4 billion over the last month, the largest such downfall in history.