Bitcoin traders suffered their worst day in a month after turbulence in traditional markets spilled into digital asset trading and caused almost $900m worth of bets to turn sour.

The liquidations that hit leveraged traders come after the US Federal Reserve signalled that it could tighten monetary sooner than many investors had expected to combat rising inflation. The prospect of rising interest rates has caused prices to tumble in equity markets and pushed yields higher on government bonds.

The shift in stance also unleashed a sell-off in bitcoin, which shed 10 per cent of its value in the last 24 hours to trade at $42,645 according to the FT Wilshire bitcoin price gauge. The sharp drop from about $47,000 washed out $895m worth of positions on exchanges, in the biggest clear-out since December 3, according to Coinglass data.