U.S. stocks sank into a bear market on Monday, with traders betting a fresh decades-high print on inflation will force the Federal Reserve to get even more aggressive than previously anticipated to help ease rising prices.

The Nasdaq Composite fell 4.7% by market close to end at 10,809.23, its lowest level since September 2020. The S&P 500 dropped 3.9% to end at 3,749.81. This set the index more than 20% below its recent record high from January, meaning it had officially fallen into a bear market.

Treasury yields rose across the curve, with the benchmark 10-year yield jumping to top 3.34% and reach its highest level since 2011.

Cryptocurrencies also slid after digital currencies lender Celsius Network said Sunday it was pausing all withdrawals, swaps and transfers between accounts on its platform "due to extreme market conditions," according to a statement.

Bitcoin prices (BTC-USD) fell by more than 17% to below $23,000 at session lows, or the lowest since December 2020, in the wake of the announcement, while Ethereum prices (ETH-USD) tumbled below $1,200. Crypto-related stocks including Coinbase (COIN) and MicroStrategy Incorporated (MSTR) also came under renewed selling pressure.

For the broader markets, investors nervously looked ahead the Federal Reserve's latest policy-setting meeting later this week, with a rate decision set for Wednesday. Up until Friday's hotter-than-expected monthly Consumer Price Index, traders widely believed the meeting would set the stage for another half-point rate hike by the central bank, bringing the target range for interest rates between 1.25% and 1.50%. However, after last week's data showed an unexpected pick-up in inflation to a fresh 40-year high of 8.6% in May, investors have raised their bets on an even bigger move by the Fed.

Fed funds futures, which help track traders' predictions for where the Fed's target interest rate band will land, shifted quickly after Friday's report and showed increased bets on an even more pronounced 75 basis point hike. As of Monday, Fed funds futures priced in an about 25% probability of three-quarter point hike and an around 75% probability of a 50 basis point hike, according to CME Group data. As recently as mid-last week, investors were pricing in a more than 90% probability that the Fed would opt for a 50 basis point rate hike.