Bitcoin Plummets to $33K, Altcoins Follow Suit
Over the previous 24 hours, the cryptocurrency market has lost over $130 billion in value as major digital currencies resumed their multi-day sell-off. Following a plunge to $33,064, Bitcoin regained some of its lost territory to trade at $33,633, a 6.20 percent loss in 24 hours, as per CoinGecko, the lowest rate since July 2021. Bitcoin is around 50% below its November historic highs.
As per CoinGecko, ethereum fell 7% to $2,226.08, its lowest rate since late July. Ether is around 51% lower than its all-time high set in November 2021. Cryptocurrency price swings have been connected with selling in higher-risk assets such as technology companies as investors brace for the US Federal Reserve to tighten monetary policy and raise interest rates.
“BTC (bitcoin) and crypto have been responding much more violently, which is reasonable considering the asset class’s characteristics, and we will probably test 30-32K given the existing mood and momentum,” Vijay Ayyar, vice president of corporate development and international growth, told CNBC via email. Ayyar stated that if bitcoin maintains a price over $30,000 for a longer timescale, for instance one week, a bottom may emerge at those rates before the market swings higher. “However, considering the paucity of optimism across the board, it will take time for the market to become really positive,” Ayyar noted.
Additionally, investors are contending with rising inflation. Bitcoin proponents often assert that the digital currency is a hedge to counter inflationary pressure, but this idea has so far failed to hold up. Analysts expressed fear that a more aggressive Fed might deflate the crypto market’s sails. Nevertheless, investors are examining the bitcoin market’s influence on more legislation. Russia’s central bank suggested last week to prohibit the usage and mining of cryptocurrency.
Bitcoin slumped to its six month low on Monday, as investors sought to flee riskier investments. Bitcoin, the largest cryptocurrency, was changing hands at $33,633 — its lowest level since July 24, 2021 — after plunging about 22% in the previous seven days, while altcoins also saw significant declines. Ethereum lost almost 31%, Binance Coin lost 28%, Cardano lost 35%, XRP lost roughly 29%, and Solana lost 40%, according to CoinMarketCap at the time of posting this story.
According to specialists, the US Federal Reserve’s latest policy statements have impacted financial markets globally, and risk assets are now being sold off ahead of the projected macroeconomic slump. Additionally, Russia and China stated their intentions to regulate cryptocurrency in their local markets, precipitating a massive sell-off in Asian markets.
“The crypto bear market is mostly a result of investors fleeing to less risky assets. This is related to a trend toward less liquidity when global interest rates begin to rise in 2022. In the meantime, the decline in technology stocks can be chalked up to increased focus on undervalued stocks, and also stocks in sectors anticipated to experience post-pandemic growth potential,” Raja Gopalakrishnan, Executive Vice President – Global Real Time Payments, FIS, told Financial Express Online.
Bitcoin’s market capitalization has also decreased to $642 billion, representing roughly 40% of the $1.5 trillion total cryptocurrency market capitalization. “The downturn in cryptocurrency prices is a result of widespread worry that the US Federal Reserve may raise interest rates, therefore depleting liquidity. Additionally, the continuing property developer market scenario in China as a result of Ever Grande has prompted the Chinese central bank to cut interest rates to support the domestic market, stoking concerns of economic instability,” Vishnu Tadepalli, a member of the Blockchain and Crypto Assets Council and CEO of crypto-thematic basket investment platform Crypto Smartlife, told Financial Express Online.
Bitcoin seems to be heading in the direction of its all-time low valuation of $29,807 on July 20, 2021. The numero uno cryptocurrency has been battling to reclaim its previous November high of over $68,000. China’s prohibition, Elon Musk’s statements about environmental concerns surrounding Bitcoin mining, and altcoin adoption have all made it more difficult for Bitcoin to retain its hegemony, despite the fact that it is still the world’s largest cryptocurrency by far.
“S&P 500 has lost nearly 7% since the beginning of this year, bitcoin has lost 17%, while gold has remained constant. The year-to-date connection between bitcoin and the high-growth reference point ARK Innovation ETF (ARKK) remained at 60%, compared to 14% for gold, spurring us to categorize bitcoin and altcoins as riskier assets instead of safe havens,” Shivam Thakral, member of the Blockchain and Crypto Assets Council and CEO of BuyUcoin, told Financial Express Online.