Following a decline in stock markets throughout the globe and the ongoing strength of the United States dollar, bitcoin prices dropped below $19,000 during trading on Wednesday morning, reaching their lowest level since June.
As a result of widespread selling of digital currencies, the total value of the cryptocurrency market as a whole dropped below $1 trillion.
According to CoinDesk, the price of bitcoin was about $18,812.36 at 3:50 a.m. Eastern Time, representing a drop of more than 5%. Ether, which has significantly exceeded bitcoin’s advances in recent months, was trading at $1,518.59, which was more than 8% lower than its previous price.
Monetary policy is becoming more restrictive as a means of combating runaway inflation by central banks throughout the globe. The Federal Reserve of the United States has recently implemented a number of interest rate rises that together amount to 2.25 percentage points. The markets are anticipating that there will be further interest rate hikes.
The Federal Reserve’s decision to increase the target range for the federal funds rate has resulted in a stronger dollar, which has been negative for risk assets. The yield on the 10-year United States Treasury note has also increased significantly.
Since Bitcoin trades in conjunction with stock prices, the cryptocurrency’s value tends to decrease in tandem with a broad decline in stock prices.
“The macro situation also continues to be challenging, as seen by the fact that the dollar is continuing to set new highs.” According to what we can see, this has an effect on all risk assets,” Vijay Ayyar, vice president of corporate development and international at the cryptocurrency exchange Luno, told CNBC.
“If we see the dollar start to move back down, then we should be able to get risk assets such as bitcoin to go back up again,” said one analyst.
Since reaching its high point in November, the value of the cryptocurrency market has dropped by about $2 trillion since the beginning of this year. Bitcoin has fallen around 60 percent from its all-time high of $68,990.90, which it reached in November.
The sell-off has been triggered by a difficult climate for risk assets as well as crypto-specific concerns like failing projects and bankruptcies that have spread across the sector. Both of these factors have contributed to the current state of affairs.