(CTN News) – Following a decline in global stock markets and the continued strength of the U.S. dollar, bitcoin traded below $19,000 on Wednesday morning.
Also, the value of the entire cryptocurrency market fell below $1 trillion as digital coins across the board sold off.
According to CoinDesk, Bitcoin was trading around $18,746.50 at 07:46 am ET, down more than 5%.
The price of Ether, which has outpaced bitcoin’s gains in recent months, fell more than 9% to $1,513.64.
The world’s central banks are tightening monetary policy in order to combat rampant inflation.
In total, the U.S. Federal Reserve raised interest rates by 2.25 percentage points. Interest rates are expected to rise further.
Fed policy tightening has strengthened the U.S. dollar, weighing on risk assets. Ten-year US Treasury yields have also risen.
In general, Bitcoin is correlated with stocks, so if they fall, Bitcoin falls as well.
In addition, the macro environment remains difficult as the dollar continues to rise.
As we can see, this impacts all risk assets,” said Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno.
We should be able to get risk assets like bitcoin back up again if the dollar starts to fall.”
Since its peak in November, nearly $2 trillion has been wiped off the value of the crypto market.
Bitcoin is about 60% off its November record high of $68,990.90.
As well as the tough environment for risk assets, crypto-specific issues like collapsed projects and bankruptcies have also contributed to the sell-off.
Ethereum merge in focus
Since June, Bitcoin has been trading between $18,000 and $24,000. Luno’s Ayyar said bitcoin normally tests previous lows to see if they hold as support when forming a bottom.
According to him, unless bitcoin falls below $17,500, then the market is likely to consolidate between $18,000 and $24,000.
Ether and other altcoins have risen further than bitcoin in the meantime.
After both cryptocurrencies hit a low in June, Ether has outperformed Bitcoin.
Ethereum’s native cryptocurrency is Ether. Known as the merge, Ethereum is undergoing a massive upgrade this month that will improve its efficiency, according to its supporters.
“Ethereum hit yearly highs against bitcoin ahead of the merge,” Ayyar said. In other words, there has been a lot more interest and activity in the Altcoin space, while Bitcoin consolidates.”
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