The largest cryptocurrency fell to $ 42,505 on January 6th. Compared to the end of 2019, Bitcoin is up 500% thanks to the stimulus measures introduced during the Covid-19 epidemic.
Other cryptocurrencies are also in the red. Ethereum plunged to its lowest level since October 13, and Binance Coin fell to its lowest level since October 2021.
“Given the current macro landscape, leverage in the Bitcoin market, and the recent strong rally in other cryptocurrencies, I think it makes sense to add weight to Ethereum and smart contract platforms. Further evidence,” Sean Farrell and Will McEvoy, two strategists at Fundstrat said in a January 5 report. “We’re probably not betting on Bitcoin in the short term.”
The recent volatility in cryptocurrencies is occurring amid a period of intense financial market volatility. The rise in inflation is forcing central banks to tighten monetary policy, threatening to drain the market of the liquidity that has been a support factor for many assets over the past two years.
US stocks fell sharply after the Fed signaled in December minutes that it could hike rates sooner and faster, with the S&P 500 down 1.9%, led by a plunge in real estate stocks. While the Nasdaq Composite Index fell more than 3%.
“The Fed is restrictive,” said Stephane Ouellette, CEO and co-founder of the virtual currency platform FRNT Financial. “Investors often view cryptocurrencies as risky assets.”
Other areas of the crypto world are also under pressure. Bitcoin mining stocks plunge as analysts review their outlook after a year of breakout.
George Town, Grand Cayman, 22nd November 2024, Chainwire
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