Business

Bitcoin tumbles to lowest level since January after stock selloff

Bitcoin is a volatile asset, and has been known to swing more than 10% up or down in a single day.

Jakub Porzycki | Nurphoto | Getty Images

Bitcoin continued to fall after a massive sell-off in stocks in the United States last week sent the cryptocurrency market into a frenzy and caused the cryptocurrency to drop by around 10%.

Bitcoin, the world’s largest digital currency by market value, was around 3% lower at $33,594.50 around 3:36 a.m. ET, according to data from Coindesk.

Bitcoin is now trading at its lowest level since late January. The virtual currency has traded in a tight range this year as it attempts to regain its late 2021 highs.

It’s now down more than 50% from its all-time high price of $68,990.90 in November 2021.

The decline comes after the blue-chip Dow Jones Industrial Average lost more than 1,000 points on Thursday and the Nasdaq plunged 5%. The losses marked the worst single-day declines since 2020. The Dow and Nasdaq fell again on Friday.

Meanwhile, the Federal Reserve on Wednesday raised its benchmark interest rate by half a percentage point in response to inflationary pressures.

The stock market rallied after Fed Chairman Jerome Powell said a bigger rate hike of 75 basis points was not on the cards. But by Thursday, investors had erased gains from the Fed’s rally.

“Overall, markets remain under pressure from inflation and growth fears,” said Vijay Ayyar, vice president of business development and international at Crypto Exchange Luno.

He said that if bitcoin fell below $30,000, it could even drop further to $25,000 before any “significant” rally.

The global cryptocurrency market capitalization was $1.68 trillion on Sunday, according to data from CoinGecko.com, and cryptocurrency trading volume over the past day was $119 billion.

Destabilized stablecoin

Crypto investors were also nervous this weekend after stablecoin TerraUSD briefly lost its peg to the dollar.

A stablecoin is a digital currency designed to peg their value to real-world assets. Stablecoin issuers often back their virtual currencies with other assets held in reserve. In this case, TerraUSD aims to be pegged to the US dollar.

The Luna Foundation Guard, which is behind TerraUSD, has purchased large amounts of bitcoins from its reserves.

However, the price of TerraUSD briefly moved away from parity with the US Dollar over the weekend before recovering. This raised fears that the Luna Foundation Guard was selling bitcoin to support TerraUSD.

“Crypto markets are also a little jittery after the UST (Terra stablecoin) briefly lost its peg over the weekend,” Ayyar said.

CNBC Tanaya Macheel contributed reports

Bitcoin tumbles to lowest level since January after stock selloff

Source link Bitcoin tumbles to lowest level since January after stock selloff

Back to top button