Biggest cryptocurrency in terms of market value drops to $42,505 in early Asia trading.
Bitcoin slumped to the lowest level since its December flash crash as growing expectations of rising borrowing rates weighs on some of the best performing assets over the past few years.
The largest cryptocurrency by market value dropped to as low as $42,505 in early Asia trading on Thursday. That pushed the price to the lowest since it touched $42,296 during a weekend crash at the start of last month. Bitcoin has surged by about 500 per cent since the end of 2019 after stimulus measures put in place during the Covid-19 pandemic.
Other cryptocurrencies tumbled as well. Ether, the number two by market value, took out its own flash-crash bottom to reach prices not seen since October 13, and Binance Coin dropped to October levels as well. Tokens of popular DeFi applications including Uniswap and Aave declined.
“Given the current macro backdrop, leverage within the Bitcoin market and recent robustness seen in the alt-coin market, we think it’s appropriate to be overweight Ethereum and other smart contract platforms,” Fundstrat digital asset strategists Sean Farrell and Will McEvoy wrote in a note on Wednesday.
“We probably would not bet the farm near term on Bitcoin but think there is an opportunity in going long volatility via derivatives strategies.”
The recent swings in cryptocurrencies come amid a volatile period for financial markets. Spiking inflation is forcing central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.
US equities deepened losses after minutes from the Federal Reserve flagged the chance of earlier and faster interest rate hikes. The S&P 500 fell 1.9 per cent, led by real estate stocks, while the tech-heavy Nasdaq 100 slid 3.1 per cent. Stock losses spread into Asia on Thursday morning.
“The Fed is hawkish,” said Stephane Ouellette, chief executive and co-founder of cryptocurrency platform FRNT Financial. “Knee-jerk reactions in crypto tend to treat them as exclusively risk assets in spite of the longer term trends around inflation, store of value et cetera.”
Other sectors of the cryptocurrency world are also under pressure. Bitcoin mining stocks took a beating as analysts reconsider their outlooks after a record-breaking year.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
