Bitcoin, the world's largest cryptocurrency by market value, plunged below $21,000 per coin on Tuesday, falling nearly 70% from its peak price in November last year. The most popular crypto coin was hovering around $21,000 marks at the time of reporting, its lowest level seen five years ago. Overall, the global crypto market cap slipped below $1 trillion levels to $958 billion, down 6.15% over the last day.
The cryptocurrency market has witnessed sharp selling in the recent past, in sync with the global equity market after U.S. consumer inflation hit a 40-year high of 8.6% in May, raising concerns that the Federal Reserve may hike interest rate aggressively which could lead to a recession. There is speculation in the market that the U.S. central bank may raise interest rates again later this week, possibly by as much as 0.75%.
According to market analysts, global financial markets are battered by rising inflation and growing geopolitical uncertainty. The high inflation in rate in some of the most powerful economies of the world has kept the investors on their toes as the crypto market has been dominated by sellers for quite some time now. “It is important to note that traditional financial markets are facing a steep downturn too due to the growing inflationary concerns. The crypto market cap crossed the $3 trillion mark for the first time in November last year which was mainly led by Bitcoin as it touched an all-time high of $69000,” says Charles Tan, chief marketing officer at Atato, a licensed MPC crypto custodian wallet.
“The current market conditions call for caution and investors should execute their investment strategy depending on their risk appetite. The rising pricing is a matter of concern for the financial markets and respite will come with inflation cooling down to an acceptable level,” Tan adds.
At the time of filing the report, Bitcoin was trading at $22,480, down 11.5% as compared to the previous day’s closing price. In the past 24-hour trade, the BTC touched an intraday high and low of $25,400 and $20,834, respectively. The digital coin traded 70% lower than its all-time high of $68,789.63 touched in November last year. It has fallen 24% in the last seven days and 50% in the calendar year 2022.
Other popular digital currencies also saw a similar trend in the past 24 hours of trade. Ethereum, the world's second-biggest crypto, was down 9% at $1,211.8, while Binance Coin and XRP fell 6% and 3.7%, respectively. Other digital coins like Dogecoin and Shiba Inu were also reeling under selling pressure, falling in the range of 1-3%.
A similar pattern was seen in global equities, with markets in Asia, Europe, and the U.S. witnessing sharp selling this week amid rate hike concerns. Indian equity benchmark, the BSE Sensex, has fallen more than 2,500 points in the last three sessions as investors expect more tightening as policymakers turn hawkish to combat rising inflation.
In the overnight trade, all three major U.S. indices nosedived after consumer inflation hit a 40-year high of 8.6% in May. The S&P 500 index ended 3.9% lower, extending fall for the fourth straight session. The benchmark is down nearly 22% from its record closing high on January 3. Meanwhile, the Dow Jones index closed 2.8% lower, and the Nasdaq Composite tumbled 4.7%.
Shares in the Asia-Pacific region were trading in the sea of red in opening deals, following a negative finish on Wall Street overnight. The Australian share market was the worst performer in the regional market, falling more than 5% in the opening trade amid rate hike concerns. Regional heavyweight Japan’s Nikkei 225 tumbled as much as 2%, South Korea’s KOSPI dropped 1.3%, and the Straits Times Index in Singapore shed 0.9%. In a similar trend, Hong Kong’s Hang Seng nosedived 1.5%, while Taiwan Weighted and Indonesia’s Jakarta Composite fell 1.1% and 0.3%, respectively. In mainland China, the Shenzhen Component and the Shanghai Composite plunged up to 1%.
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