- Bitcoin has dwindled under increased selling pressure from traders to fall below the $40,000 mark.
- Other altcoins like Ethereum, Cardano, and Solana faced even steeper falls as the carnage persisted.
- Market capitalization for the cryptocurrency markets stands at $1.87 trillion.
Top Cryptocurrencies across the charts have experienced losses of around 3-5%, shedding most gains attained since the start of the month. While Bitcoin was not the hardest hit, the fall saw the largest cryptocurrency in the world plunge below $40k.
Bitcoin’s Big Dip
On Tuesday, Bitcoin had the steepest fall in weeks as it fell below the $40,000 mark for the first time since March 16. The asset lost as much as 13.26% over the week after reaching a high of $47,106 from the buzz generated from the Bitcoin conference in Miami.
Several reasons have been proffered in an attempt to explain the reason for the plummeting prices. A key reason adduced by several pundits is the increasing correlation between Bitcoin and the US stock market that has been tracked since the start of the year. At the start of the last weekend, the Nasdaq 100 was below the moving average and it was expected that Bitcoin would shed some of its value in sync with stocks.
The whispers of the Fed tightening monetary policy were heightened over the weekend and most likely led to the dip in prices. With inflation threatening to exceed 9% for the first time in over 40 years, analysts are predicting that the Federal Reserve could increase interest rates.
“Fed tightening by 0.5 percentage point steps at the upcoming meeting as well as $95 billion per month balance sheet run-off sent crypto markets spiraling lower,” said Teong Hng, CEO of Satori Research.
In the last 7 days, Bitcoin has lost over 8%, sending its market cap below $800 billion for the first time in weeks. The asset managed to maintain a market dominance of over 40% while trading volume spiked to 117.07% as traders struggled to understand the raging chaos.
The Altcoin Markets
Bitcoin was not the hardest hit in the massive price correction that hit the markets this week as altcoins seemingly bore the brunt of the blip. Amongst the top 10 largest cryptocurrencies, Avalanche’s AVAX recorded a loss of 10.69% in the last 7 days while LUNA bore a loss of 18%.
Ethereum shed 7% of its value to trade less than the $3,000 mark while Solana and Cardano both shared 11% losses to trade at $101 and $0.9477 respectively.
Josh Olszewicz, research head at Valkyrie noted that “altcoins have a tendency to over-perform Bitcoin to the downside in strong bearish trading environments.” He added that the reason for the trend was because altcoin investors “often have less longer-term conviction.”
