A pervasive weekend selloff in the cryptocurrency market accelerated dramatically during Sunday evening U.S. trading hours, sending Bitcoin (BTC) plummeting to levels unseen since February and Ether (ETH) reverting to prices not observed since December.

Bitcoin has nosedived 12% over the past 24 hours and suffered a 20% decline on a week-over-week basis. Ether, now down 21% in the last 24 hours and 30% over the past week, has relinquished all of its year-to-date gains, posting an overall 3% decrease since January 1.

The catalyst for this substantial market correction in both crypto and traditional markets appears to be the Bank of Japan’s recent hike in its benchmark interest rate. This monetary tightening propelled the yen higher and caused the Nikkei stock index to tumble. Early Monday, the Nikkei dropped another 6%, marking a 15% decline over the past three sessions and a 20% drop from its mid-July peak.

The turbulence in Japan’s financial markets reverberated across the globe, impacting the U.S., where the Nasdaq Composite Index fell more than 5% in the last two sessions of the previous week. Nasdaq futures were down 2.5% during Sunday evening trading.

Compounding the market instability was the U.S. Federal Reserve’s unexpected stance. Although the Fed held interest rates steady, it exhibited a surprising lack of urgency about potential rate cuts in September, contrary to market expectations.

The Federal Reserve’s ambiguous policy stance left market participants uncertain, resulting in a 100% probability of lower U.S. base rates in September being priced in by traders. Currently, there is a 71% chance of a 50 basis point rate cut and a 29% chance of a 25 basis point adjustment.

Meanwhile, the U.S. 10-year Treasury yield fell to 3.75% on Sunday evening, down from 4.25% just a week ago and significantly lower than the current federal funds target range of 5.25% to 5.50%.

This widespread financial volatility underscores the interconnectedness of global markets and the ripple effects of monetary policy decisions across different asset classes.