The world's largest crypto Bitcoin has tanked 7.02% in the past 24 hours, while Ethereum plunged 10%, continuing its downward rally amid volatile market conditions and concerns that the U.S. Fed might resort to further tightening of key policy rates to tame rising inflation in its upcoming meeting.
Dropping below $20,000 levels on Monday, Bitcoin was trading at $18,471.13 at the time of filing the report, while Ethereum, which saw its most crucial update, called The Merge, last week, is trading at $1,299.60.
The latest drop in cryptos has further wiped out some of the gains made by investors in the past couple of months. Bitcoin was at $47,255.90 a year ago on September 19, 2021. Crypto, which saw its peak level of $66,017.70 in November 2021, has seen a continuous decline since then.
From $3,767.54 on September 19, 2021, to $1,309.35 currently, Ethereum has also failed to attract investors even after its much-awaited software infrastructure upgrade. Ethereum had also surged to its peak of $4,644.43 in November 2021.
Ethereum’s software upgrade, which came after about 8 years of wait, is aimed at reducing its energy consumption by up to 99.95%. It’ll make the blockchain super easy and cheap to use as compared to other cryptos, including Bitcoin. However, investors seem to have stayed away from pumping money into the crypto despite the mega update.
Ethereum's shift from proof-of-work (PoW) to proof-of-stake (PoS) took years because its developers had to construct an entirely new blockchain called Beacon Chain, which was unveiled in 2020. The Merge was fully executed on September 15, 2022, without any glitch, and this completes Ethereum's transition to PoS consensus. Notably, Bitcoin still works on a proof-of-work system, which makes it a target of crypto sceptics on environmental concerns.
Other popular coins and cryptos like Solana, Dogecoin, and Shiba Inu also plunged 5.68%, 6.28% and 7.94%, respectively.
The higher-than-expected rise in U.S. inflation and warning of global recession by the World Bank in the backdrop of the continued rise in interest rates by central banks globally, especially the Federal Reserve, has left investors jittery.
On Friday, all three major U.S. indices closed lower on Wall Street, registering one of its biggest single-day losses in the last two months, as concerns about a global economic slowdown as well as FedEx’s warnings about earnings outlook spooked investors’ sentiments.
The Dow Jones Industrial Average settled 0.46% lower, the S&P 500 dropped 0.69%, and the Nasdaq Composite tumbled 0.9%. In the backdrop of a higher-than-expected inflation report (CPI) in August, the Federal Reserve is expected to raise the interest rate by at least 75 basis points at its policy meeting later this week.
India, meanwhile, has slipped two places to fourth in crypto adoption rate on crypto tax and uncertainty around its legal and regulatory status, a report ‘The 2022 Global Crypto Adoption Index Top 20’ by the US-based crypto analysis platform Chainalysis shows. It ranks Vietnam in first place, followed by the Philippines and Ukraine in the second and third spots. Vietnam has topped the chart for the second consecutive year.