The bloodbath seen in the cryptocurrency market has intensified with Altcoin leader, Ether, falling below the $1,000 support zone, as investors react further to the increase in interest rate by numerous central banks during the week, in a bid to tame the ever-increasing inflation rate.
During the week the United States Federal Reserve announced an interest rate hike of 75 basis points (0.75%) in a bid to tame the ever-increasing inflation rate, in which the consumer price index in the United States, the most widely followed measure of inflation, climbed 8.6% year over year in May, beating expectations for a drop to 8.2% from 8.3% in April. This is the biggest hike in the U.S. since 1994.
Asides from the U.S., The Swiss National Bank surprised the market by raising its key rate by 50 basis points also during the week, as well as the Bank of England who increased its interest rate, hiking for the fifth straight time by 25 basis points. Even in Nigeria, earlier this month, the Nigerian financial watchdog, the Central Bank of Nigeria, increased the Monetary Policy Rate (MPR) to 13% from 11.50% (150 BP), its first hike since September 2020.
What you should know
- Flagship cryptocurrency asset Bitcoin also fell below $20,000 amid the current market sell-off we are experiencing. Bitcoin is currently trading below its 2017 all-time high.
- The selloff is being felt across all markets, with majority of the top 100 cryptocurrencies have lost over 90% of their value from their respective all-time highs.
- The cryptocurrency market capitalization, which peaked at nearly $3 trillion in November 2021, is currently trading below $1 trillion, to currently stand at $843.5 billion, down over 7%, as of the time of this writing.
- Many experts are attributing the recent selloffs to the collapse of the Terra blockchain and the subsequent move by crypto lender, Celsius, restricting withdrawals.
- There are also worries about Three Arrows Capital, a crypto hedge fund, that incurred big losses and said it was shutting down, adding to the panic selling we are seeing in the market.
Other altcoins, especially those that are terms Ethereum killers, are also feeling the heat from the selloff as they are posting losses of 20% and more in the last seven days.
Recent data from CoinGecko explains that majority of the top 100 cryptos by market capitalization have lost 90% of their value or more when compared to their respective all-time highs, which majority saw last year.