The price of the world’s flagship cryptocurrency, Bitcoin, crashed by over 50% from its all-time high on Saturday as traders dumped assets for cash.
Bitcoin fell to as low as $34, 243 (according to Binance) before clawing back above $35,000 in the early hours of Sunday, Nigerian time. Bitcoin hit an all-time high of $67,566 on the 8th of November 2021 at a time when bullish investors predicted we could be hitting $100,000.
The crash in bitcoin prices follows a decision by the US Fed to raise interest rates at least three times precipitating the liquidation of most leveraged assets in the market.
Altcoins suffer mega loss
Bitcoin is not the only cryptocurrency that has suffered massive losses. Ethereum the second most capitalized cryptocurrency has also fallen from its all-time high of $4,812 to about $2,400 as traders intensified the sell-offs across board.
- Also affected in the sell-offs are BNB, Cardona, Solana, XRP all of which make up the top 10 most capitalized cryptocurrencies in the world.
- So far, the market capitalization of cryptocurrencies has fallen by over 43% from $2.9 trillion in November 2021 to around $1.65 trillion today.
- Over a trillion dollars in crypto values have been wiped out this year already.
- Despite the crash with cryptocurrencies, stable coins remain “stable” as investors liquidate their positions in bitcoins and altcoins in exchange for stable coins which are pegged to the dollar. Tether the world’s largest stable coin is at an all-time high of $78 billion in market capitalization.
Why Crypto is crashing
- 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.
- 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.
- Reports also indicate Russia’s Central Bank also plans to ban cryptocurrency and has put forward a proposal to Kremlin that all use and mining of cryptocurrencies in Russian territories be banned.
