Bitcoin plunged below $40,000 in 24 hours and fell 15%. This is the lowest level since March 22nd. Ethereum fell 14% and fell below $3,000 for the first-time since March 22nd.
According to Coingecko data, BTC traded at $39,783 as of the writing. Ether (ETH), however, fell to $2,978.54 at the time.
Investors are weighing the prospects of rising interest rates, skyrocketing inflation, and global commerce being disrupted as a result of Russia’s attack on Ukraine, among other factors.
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Bitcoin Drops to a Monthly Low
Bitcoin and stocks are sliding due to the possibility of more rate increases by the US Federal Reserve. As a result, hundreds of millions worth of liquidations were conducted.
Market experts believe that the central bank’s balance sheet reductions are exerting downward pressure on stocks and risk assets, with Bitcoin potentially losing allure.
Decentrader co-founder filbfilb concurred with these severe headwinds, stating that the Fed’s action will have an effect on the BTC price trend “for months to come.”
Lesser Exposure To Speculative Assets
As a result of fears over inflation and slowing economic progress, some investors are reducing their exposures to speculative assets such as stocks or cryptocurrencies.
The 10-year Treasury yield rose to 2.77%, an increase of three years, on Tuesday. This lowers the value of technology stocks that are high-priced.
Bitcoin has become increasingly correlated to stock prices, despite being generally in a reasonable relationship with its price.
BTC Total Market Cap at $765.42 Billion on the Weekend Chart Source: TradingView.com| Source: TradingView.com
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Last month, the cryptocurrency asset’s price correlation with the S&P 500 reached 0.50, with -1 indicating that they move in complete opposition to one another and 1 indicating that they move in perfect sync.
Arcane Research data showed that this was the highest level since October 2020.
Nydig, an asset manager who is focused on Bitcoin, made the following note to investors:
“Bitcoin investors continue to be concerned about rising interest rates and the prospect of tighter monetary conditions.”
Crypto Meltdown in the Making
On Sunday, BitMEX founder Arthur Hayes warned of a “coming crypto carnage” and projected that both Bitcoin and Ether would continue to plummet far further.
The billionaire investment banker-turned-crypto mogul predicted that Bitcoin and Ether will “bottom well before the Fed moves” and reverses course on its tightening policies.
Hayes predicted that two of the most popular cryptocurrencies would reach the $30,000-$2,500 level by June.
Coinglass reported that $440 million was liquidated in less than 24 hours across the wider crypto market. There have been over 140,000 trades. Only one trade saw a $10m loss.
Featured Image from Medium. Chart from TradingView.com