Since then, the cryptocurrency has recouped some of its losses and is down more than 16 percent to $ 47,693.75. Ethereum, the second-largest cryptocurrency by market cap, also saw a similar sell-off as it fell nearly 15 percent to $ 3,905.
The collapse has been triggered by risk-off sentiment that has swept global markets in the wake of the emergence of the new variant of COVID-19 and the sudden turn to aggressiveness by the chairman of the US Federal Reserve. Jerome. Powell.
Powell's support for faster reduction of the US FedThe bond purchase program, which will provide less liquidity to the system and tighten financial conditions relative to the historically lax conditions of the last 21 months, is considered negative for speculative activity in the market.
"Risky assets like stocks and Bitcoin are sinking simply because Powell hinted that the Fed could close the cut a couple of months earlier and the first 1/4-point rate hike may also come a little earlier," Peter Schiff, chief economist and global strategist. at Euro Pacific Capital, he said on Twitter.
Liquidation in the cryptocurrency market was more difficult for companies like Cardano, Solana, Polygon and Shiba Inu, which sank between 13% and 20%.
Analysts suggested that much of the selling pressure in the Bitcoin market was on the cash side, which was exacerbated by high leveraged positions in Bitcoin derivatives by traders. The instantaneous collapse in prices to $ 42,000 was the result of traders triggering stop-losses on their derivatives positions.
"However, long-term investors should buy into these long cascades of liquidation which are essentially forced selling and not organic," said Ishan Arora, partner at Tykhe Block Ventures.
