The broader cryptocurrency market has been particularly rattled in the past 24 hours, with Bitcoin dropping below the $26,000 threshold once again. Bitcoin is currently selling at $25,168.94, down 16% in the past week, according to Coingecko statistics published on Monday.
With Bitcoin dropping to its lowest level since late 2020, the entire cryptocurrency market is feeling the pressure of recession fears, which could deter investors from placing riskier bets.
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However, alternative coins are heavily affected. Ethereum, for example, has fallen below $1,500, down 70 percent from an all-time high of over $4,900 in November 2021. In the past 24 hours, Dogecoin, TRON, and Avalanche have all seen double-digit losses.
The total cryptocurrency market cap has been trading in a bearish channel over the past month and is currently supported at $1.17 trillion.
The crypto market has become increasingly tied to traditional equity markets in recent months (CNBC).
$100 billion wiped out from the crypto market
The cryptocurrency market lost more than $100 billion over the weekend after US Treasury Secretary Janet Yellen offered a grim warning about cryptocurrency.
The market valuation of Bitcoin has fallen to $520 billion. The silver lining for the BTC bulls is that their control of alternative cryptocurrencies has increased to around 48 percent.
After a few short and fruitless bids to cross $32,000 in the past seven days, the world’s largest cryptocurrency is gradually losing value. Bitcoin’s recent rejection at this level has sent its price down to $30K, where it has been holding for several days.
BTC total market cap at $498 billion on the weekend chart | Source: TradingView.com
Rich Blake of crypto startup Uphold says:
“Cryptocurrencies seem to be missing out on the perfect opportunity to make clear their forgotten function as an inflation hedge.”
Inflation fluctuations and bitcoin fluctuations
Inflation estimates for the United States, 8.6 percent, were announced late Friday. Bitcoin’s four-decade record increased volatility, bringing today’s drop to the $25,000 mark.
In recent months, the cryptocurrency market has become increasingly associated with traditional stock markets. The technology-focused Nasdaq is down 3.5%, while the S&P 500 and Dow Jones industrials are down more than 2.5%.
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The two-day meeting of the US Federal Reserve, next week, is expected to lead to another increase in interest rates. This week, Yellen also warned against putting cryptocurrency in 401(k) plans, adding to the bleak sentiment.
Last week, the central banks in Australia and Canada, where inflation is also ramping up, raised their rates by about 50 basis points, while the European Central Bank announced it would halt asset purchases and start raising interest rates later this summer.
Featured image from Reynolds and Reynolds, chart from TradingView.com