Bitcoin has fallen 15% in the last 24 hours, falling below $ 40,000 for the first time since mid-March. Meanwhile, Ethereum was down 14%, falling below the $ 3,000 level for the first time since March 22nd.
BTC traded at $ 39,783 at the time of writing, while Ether (ETH) fell to $ 2,978.54, according to Coingecko data.
Investors fear the prospect of rising interest rates, rising inflation, and global trade is disrupted as a result of Russia’s attack on Ukraine, among other factors.
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Bitcoin falls back to monthly low
Dealing with the threat of further rate hikes by the US Federal Reserve, Bitcoin, along with equities, is slipping to a monthly low. As a result, hundreds of millions of dollars in liquidations have occurred.
Market experts believe that the central bank’s balance sheet reductions will put downward pressure on equities and risk assets, with Bitcoin potentially losing allure.
Decentrader co-founder filbfilb agreed with this severe headwind, stating that the Fed’s action will have an effect on the BTC price trend “for the coming months.”
Less exposure to speculative assets
Investors seem to be reducing their exposure to speculative assets, such as stocks and cryptocurrencies, in response to fears about inflation and slowing economic development.
In addition, the 10-year treasury yield rose to a new three-year high of 2.77% on Tuesday, lowering the present value of high-priced technology stocks.
Bitcoin, which is generally reasonably linked to the prices of other cryptocurrencies, has recently become more correlated with stock prices.
BTC total market cap at $765.42 billion on the weekend chart | Source: TradingView.com
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Last month, the price correlation of the cryptocurrency assets with the S&P 500 reached 0.50, with -1 indicating that they are moving towards each other in complete opposition and 1 indicating that they are moving in perfect synchronization.
According to Arcane Research, this was the highest rate since October 2020.
Nydig, a Bitcoin-oriented asset manager, noted in a note to investors:
“Bitcoin investors continue to worry about rising interest rates and the prospect of tighter monetary conditions.”
On Sunday, BitMEX founder Arthur Hayes warned of an “impending crypto-carnage” and predicted that both Bitcoin and Ether would fall further.
The billionaire investment banker-turned-crypto-mogul predicted that Bitcoin and Ether would “understand well before the Fed moves” and reverse the course on their tightening policies.
Hayes expects the two leading cryptocurrencies to reach $ 30,000 and $ 2,500 levels by the end of June.
Within 24 hours, Coinglass reports that about $ 440 million has been liquidated across the broader crypto market. This totals more than 140,000 trades, one of which resulted in a $ 10 million loss on one trade.
Featured image from Medium, chart from TradingView.com