Slump deepens for crypto market as Bitcoin slides below $34,000
Bitcoin today shed five per cent of its value to stand below $34,000 as global equity markets sunk lower on concerns about US interest rates.
The crypto market has wiped 8.5 per cent from its global market cap in the past 24 hours, shedding over a hundred billion of its value to stand at $1.52 trillion with the ten largest crypto assets by market capitalisation all trading in the red. Bitcoin has wiped half of its value compared to an all time high of $69k in November while Ethereum tumbled 12.24 per cent, Cardano fell by 14.89 per cent and Solana is down over a fifth.
The price drop follows a poor performance across the wider financial markets. Last week saw the S&P 500 and Nasdaq log their worst week since the onset of the pandemic in March 2020, with investors still in limbo ahead of a Fed decision on interest rate increases.
“With a number of critical market factors still in flux, the short-term market direction can remain volatile,” said Mark Haefele, the chief investment officer of UBS international.
“But for longer-term investors, we don’t think it is a bad thing if market volatility takes some of the air out of the more speculative corners of the market—Bitcoin is down 23.8 per cent year-to-date. Nor is it a bad thing if current volatility means that some secular growth names are being offered at their best prices in months,” Haefele added.
The current bloodbath in the crypto markets also coincides with regulators worldwide considering tough new rules on crypto.
Last week, Russia’s central bank published a report recommending that crypto trading and mining is banned. The UK, Spain and Singapore all announced a crackdown on advertising for digital assets amid concerns that crypto promotions are misleading inexperienced investors. The Biden Administration has revealed an executive order on digital assets could be coming as early as next month that will outline a government strategy on crypto.
“We’ve had the party. Now its time for the hangover,” said Charlie Morris, chief investment officer for blockchain analytics firm ByteTree.
“The biggest problem is external. We’re in the midst of a global risk sell off,” he continued, noting the slump in global equity markets.
“You could also point to the four year cycle,” Morris continued, referencing the cyclical patterns in Bitcoin’s price that follow halving events which occur every four years.
Morris noted that Bitcoin’s last halving event occurred in May 2020 spurring a bull run which may be coming to a natural end ahead of the next halving event.
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