- Bitcoin slumps to below $36,000 and loses 45% of its value as crypto market fears grow
- The aggregate crypto market loses over $1 trillion
Bitcoin plunged to its lowest level since July on Monday as it plunged below $33,000, per CNBC. It has since recovered a bit and risen above $36,000, but it is still down by 45% of its value from a record-breaking November where it had reached a high of nearly $69,000.
The crypto market as a whole has suffered a massive nosedive, with cryptocurrencies across the board taking a huge hit and plummeting in value. Many crypto investors are already predicting the possibility of a “crypto winter” and suggesting the worst is still to come.
The crisis of confidence in the crypto market is estimated to have triggered a loss of more than $1 trillion as investors try to decrease risk ahead of a key Federal Reserve policy meeting. Bloomberg reported that this is the second-largest drop that cryptocurrency has ever experienced, according to the Bespoke Investment Group. Bespoke analysts explained, “It gives an idea of the scale of value destruction that percentage deadlines can mask. Crypto is, of course, vulnerable to these sorts of selloffs given the naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about.”
Besides Bitcoin, other cryptocurrencies—both small and large—have also taken a huge hit. Per Reuters, the second-largest digital coin, Ether, fell 13 percent to $2,202 on Monday. The fourth-largest crypto-token, Binance Coin, was down 12 percent. Meanwhile, U.S.-listed cryptocurrency miners such as Riot Blockchain, Marathon Digital, and Bit Digital dropped between 7.3 percent and 12 percent in premarket training.
Per Euronews, the situation has been made worse by growing fears of a Ukraine-Russia conflict. In the weekend, the U.S. State Department ordered the family members of diplomats to depart Ukraine. The drastic move seems to suggest that Biden’s government is preparing for Russia to aggressively invade the region. The fears surrounding this conflict have negatively affected the cryptocurrency market while boosting the value of the dollar and oil.
With the U.S. Federal Reserve’s central bank expected to announce that it will start draining the pool of liquidity that has supercharged growth stocks and an anticipated hike in interest rates, the dire situation faced by Bitcoin and the cryptocurrency market as a whole looks set to escalate. President of Horizon, Mark Elenowitz, explained, “Bitcoin will face headwinds going back up until the macroeconomic conditions change. Generally speaking, when rates are hiked, we could see more sell-offs of seemingly risk-on assets like Bitcoin.”