Monday 24 January 2022 12:33 pm
Bitcoin today shed five percent of its value to settle below $34,000 as global stock markets sank on concerns over US interest rates.
The crypto market has shed 8.5 percent of its global market cap in the last 24 hours, shedding over a hundred billion of its value to stand at $1.52 trillion with the top ten largest crypto assets by market cap, all trading in the red. Bitcoin has wiped out half its value compared to an all-time high of $69k in November, while Ethereum is down 12.24 percent, Cardano is down 14.89 percent and Solana is down more than a fifth.
The price drop follows poor performance in the broader financial markets. Last week, the S&P 500 and Nasdaq posted their worst week since the start of the pandemic in March 2020, with investors still in limbo ahead of a Fed decision on interest rate hikes.
"With a number of critical market factors still in flux, the near-term market direction may remain volatile," said Mark Haefele, chief investment officer at UBS International.
โBut for longer-term investors, we don't think it's a bad thing if market volatility takes some of the air out of the more speculative corners of the market: Bitcoin is down 23.8% year-to-date. It's also not a bad thing that the current volatility means some secular growth names are being offered at their best prices in months," Haefele added.
The current bloodbath in the crypto markets also coincides with regulators around the world considering tough new rules on cryptocurrencies.
Last week, Russia's central bank published a report recommending a ban on cryptocurrency trading and mining. The United Kingdom, Spain and Singapore have announced crackdowns on advertising for digital assets amid concerns that cryptocurrency promotions are misleading inexperienced investors. The Biden Administration has revealed that an executive order on digital assets could come as soon as next month and will outline a government strategy on cryptocurrencies.
โWe have had the party. Now is hangover time,โ said Charlie Morris, chief investment officer at blockchain analytics firm ByteTree.
โThe biggest problem is external. We are in the midst of a global sell-off of risks,โ he continued, pointing to the slump in global stock markets.
"It could also point to the four-year cycle," Morris continued, referencing the cyclical patterns in Bitcoin's price that follow the halving events that occur every four years.
Morris noted that Bitcoin's last halving event occurred in May 2020, sparking a bull run that may be coming to a natural end before the next halving event.
Read more: Crypto Businesses Need a Regulatory Association to Fight Fraudulent Activity
