The biggest cryptocurrency in the world, bitcoin, continues to decline this year, dropping under $26,000 in the middle of a larger selloff sparked by concerns about increasing US interest rates. (Bitcoin price hits late-2020 levels as crypto market suffers fresh)
Digital currencies plummeted throughout the weekend, and they fell even more on Monday morning in Asia as investors’ worries that the Federal Reserve could need to take more dramatic steps to control inflation intensified in response to a fresh inflation shock.
Bitcoin price hits late-2020 levels as crypto market suffers fresh
As the chaos in the cryptocurrency market erupted, a well-known lender to the industry stopped enabling customers to withdraw money. Celsius Network LLC announced it was stopping all withdrawals, cryptocurrency exchanges, and account transfers due to “extreme market circumstances.”
According to figures released on Friday, consumer price inflation in the US climbed to 8.6% in May, above expectations and hitting its highest level in more than 40 years.
The US stock market fell on Friday as a result of the report, and Asian share indices also fell on Monday.
One bitcoin cost $25,588 as of Monday morning in Hong Kong. That was 9.6% less than where it was on Friday at 5 p.m. ET. If that level maintains during New York trade hours, the end-of-day level would be the lowest since December 2020.
Ethereum
Ethereum, a key cryptocurrency, fell to around $1,357, or over 19%, from late Friday.
The price of cryptocurrencies has been moving in lockstep with conventional markets in recent weeks, frequently mimicking other risky assets like stocks but with higher volatility.
According to Jeff Mei, chief marketing officer of chain technology solutions firm ChainUp, the first cryptocurrencies to be exchanged amid a market selloff are generally hazardous and very liquid.
According to Experts
Markus Thielen, the chief investment officer of IDEG Asset Management Ltd., claims that the market has begun to accept Jerome Powell, the chairman of the Federal Reserve, at his word that “the Fed must move more aggressively if there are no clear signs that inflation is coming down” from comments he made last month.
According to the highly recognized University of Michigan consumer mood survey, the public’s prediction of inflation over the next five years jumped to 3.3% from 3% in May, the highest level since 2008.
The public is “losing trust that the US central bank will be able to push inflation lower,” he claims. A shift in Fed policy is likely required for cryptocurrencies to become very enticing once more, Mr. Thielen concluded.
Since reaching an all-time high of $ 67,802 in November, Bitcoin has already decreased by more than 60%. Due to this, the market as a whole has lost close to $ 2 trillion. The total market value of cryptocurrencies, which peaked in November at $ 2,968 trillion, was $ 1,031 trillion on Monday, according to statistics from CoinMarketCap.
The most recent drop in bitcoin prices also happened after Treasury Secretary Janet Yellen said last week that most retirement savings should avoid investing in cryptocurrencies because they are extremely risky.
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