Cryptocurrency
Bitcoin Plunges More Than 50% From its All-Time High
(CTN News) – The world’s most valuable cryptocurrency fell 10% Monday after plunging again over the weekend. Over the past week, bitcoin prices are down nearly 20%. The bitcoin price is just below $31,000, more than 50% below its record high of near $69,000 from late last year and the lowest since July 2021.
Altcoins, or alternative cryptocurrencies, have also been hit hard. All four of Ethereum, Binance, Solana, and Cardano have plummeted about 15% in the past week, while Elon Musk’s beloved dogecoin has fallen 10%.
Bitcoin is proving to be just as risky as stocks, and it is susceptible to the same concerns that are dragging down the Dow, S&P 500, and Nasdaq.
Skilling CEO Michael Kamerman says volatile trading in digital assets is not unusual. Investors increasingly treat cryptocurrencies like tech stocks, treating both as risky assets, and often retreating to safer corners of the market during bouts of market volatility.”
Kamerman said he is still bullish on bitcoin in the long run. Some global central banks are also starting to embrace crypto, and hedge funds and other big institutions are investing in it more.
However, he said “bitcoin is not immune to the global inflation risks spreading across most asset classes, so we should expect the decline to continue.”
Bitcoin hit by the same problems dragging down stocks
Worries about inflation, interest rate increases from the Federal Reserve, and fears of an economic slowdown have sent bond yields soaring.
In the past year, the yield on the 10-year Treasury bond has more than doubled to just above 3.1%. Bond yields have now reached their highest level since November 2018.
With the rise in yields, the dollar has also gained value, which rises in tandem with interest rates. The US Dollar Index has reached its highest level in 20 years. That’s bad news for bitcoin too, as many crypto enthusiasts see dollar weakness as a bullish sign.
Must Read: Bitcoin Falls Below $35,000 for the Weekend, following Friday’s Losses
Crypto skeptics believe bitcoin has just begun to sell as rates (and the dollar) continue to climb. As the Federal Reserve starts to reduce its monthly bond purchases and another stimulus, this could be bad news for various speculative assets.
Jay Hatfield, a chief investment officer of Infrastructure Capital Management and manager of the InfraCap Equity Income ETF, said that Fed’s dramatic withdrawal of liquidity would collapse the pandemic era bubble in cryptocurrencies, money-losing tech companies, and meme stocks.
Hatfield believes bitcoin prices could fall as low as $20,000 by the end of the year.
Crypto stocks are also suffering. Coinbase dropped 17% Monday and is down over 65% for the year. In 2022, Robinhood, which allows cryptocurrencies to be bought and sold, has fallen over 45%.
Additionally, shares of several cryptocurrency miners, the companies that run servers that generate bitcoin and other cryptos, have fallen.
Marathon Digital Holdings (MARA), Hive Blockchain (HVBTF), and Riot Blockchain (RIOT) are all down between 50% and 60% this year.
This massive pullback in momentum tech stocks is a sign of the rapid change in the market’s mood this year. CNN Business’ Fear & Greed Index, which measures seven indicators of market sentiment, is in Extreme Fear.
Some investors may continue to avoid volatile cryptos in favor of safer havens, such as dividend-paying blue chips.
Tammy Da Costa, an analyst at DailyFX, said traders are “more reluctant to adopt the crypto sphere’s additional risks.”
Moreover, she stated that “the future of individual coins or tokens remains doubtful” and that “interest rate hikes are likely to undermine short-term profits” in bitcoin, Ethereum, and other established cryptos.
