Bitcoin plummeted by more than 7% in the last 24 hours and was trading at $38,5K in the early hours of Friday.
Experts had warned previously that bitcoin might fall below $40K due to concerns of pending interest rates hike and crypto ban proposal set in place by the Russians.
Ether, the second-largest cryptocurrency by market cap, dived 8% in the last 24 hours. It was trading as low as $2,860 for the day according to data seen from the FTX exchange.
How the crash stacks
- For the day, 185,480 traders were liquidated, with assets worth over $715 million. The largest single liquidation order happened on Bitmex – XBTUSD value $9.91 million.
- Binance had the most liquidations of all the exchanges, with $173 million, 91% of which were long positions. In second place was Asian-focused exchange Okex, with $170 million in longs.
- A common investment case for the flagship crypto is that it serves as a hedge against rising inflation as a result of quantitative easing by global central banks in order to tame COVID-19 disruption in the global economy, but experts are saying the risk is that a more hawkish Federal Reserve may take the hit on Crypto assets.
- The declines in crypto follow Wall Street losses on Thursday. The Nasdaq was down almost 5% this week, and the S&P 500 is into its third straight week of losses.
- As the 10-year U.S. Treasury yield spiked earlier this week, rising rates have caused investors to shed their positions in riskier assets. Yields move opposite to prices.
- The Federal Reserve has also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.
- Since November, Bitcoin prices have tumbled more than 50% from their record high of $69K.
- As a result of intense price fluctuations and increased regulatory scrutiny, many industry experts predict that the crypto market will continue to experience a downturn.
- Regulators are also targeting cryptocurrencies. Besides the Chinese government banning all crypto-related activities, U.S. authorities are cracking down on several aspects of the market as well.
- A Russian official has proposed banning the use and mining of virtual currencies on Russian soil, claiming it threatens monetary policy sovereignty and financial stability.