The largest digital currency in the world by market value, Bitcoin, has fallen by 50% since its peak in November 2021. The value of the cryptocurrency has now dropped below $34,000 as per reports by the cryptocurrency exchange, Coinbase.
The immense drop comes as international stock markets dropped over the past few days, with the blue-chip Dow Jones Industrial Average losing over 1,000 points on Thursday and NASDAQ plunging by 5%. These drops marked the worst since 2020, with both Dow and NASDAQ plunging again on Friday.
Coming in second after Bitcoin, Ethereum also dropped in value by more than 10% last week.
Bitcoin makes up about one-third of the cryptocurrency market and is valued at $650 billion. However, the digital asset has been trading in a narrow range as it attempts to reclaim its highs of 2021.
Crypto expert Wendy O explains:
Interest rates increased, and crypto markets dumped. As far as Bitcoin goes, it looks like we’re going to kiss the $35,000 area. Personally, I feel we may bottom out at $29,000 again and get a pump in July. This is why you should have a bullish and bearish plan because the markets can switch super fast.
The gigantic plummet of digital assets and the stock market was also caused by the United States Federal Reserve raising its benchmark interest rate by 0.5% to combat inflation. Other reasons include the ongoing geopolitical crisis and the shifting U.S. monetary policy.
CIO at IDX Digital Assets, Ben McMillan stated:
Like all risk assets, crypto prices this year have been disproportionately driven by the war in Ukraine, inflation, and the outlook on Fed Policy (particularly the taper schedule). So while we’re seeing crypto prices at relatively attractive prices on a longer-term outlook, there could still be a considerable downside in the near term.
According to CoinGecko.com, the global cryptocurrency market cap was at $1.68 trillion on Sunday while the cryptocurrency trading volume was at $119 billion.