Bitcoin, the largest cryptocurrency in market capitalization and dominance, slipped below $33,400 on Monday. It has wiped over half of the investors’ wealth, having hit its lifetime peak of $67,566 in November 2021.
According to experts, the rising interest rates, the anticipation of a sluggish global economy, global economic crisis, inflationary worries, and risk aversion are some of the factors pushing the Bitcoin price lower.
This fall is not exclusive to Bitcoin. Ethereum, which is the second-largest cryptocurrency, also recorded a 5% drop from the start of the weekend, reaching $2,440.
Since Friday, Bitcoin price has broken below its three-month upward trend line, falling out of the $35,000 to $46,000 range it has maintained in the first few months of 2022. Experts are now warning that the fall in Bitcoin price could be the start of a new trend as Bitcoin value almost hits the lowest value it has recorded since July 2021.
Edul Patel, the CEO of Mudrex, a cryptocurrency investment platform, has said, “The downward trend is likely to continue for the next few days.”
Vikram Subburaj, the CEO of Giottus crypto exchange, has stated that Bitcoin and the entire crypto market have been affected by the negative sentiments from investor groups.
While addressing Fortune, Lucas Outumuro, the head of research at IntoTheBlock, said that “until the market starts looking past the impact that [quantitative tightening] and raising rates will have, I find it difficult for Bitcoin to establish a broader uptrend.”
Bitcoin, the largest crypto asset, has a market cap of $635 billion and has recorded a 13% increase in trading volume as over $37.26 billion Bitcoins were traded over the past 24 hours.
At the same time, the total market capitalization of cryptocurrency has dropped by more than 50% to $1.51 trillion from $3.15 trillion when the market was in full swing in late 2021.
However, despite the fall in Bitcoin price, the cryptocurrency has increased its dominance in the cryptocurrency market. Bitcoin’s dominance currently stands at 41.64 percent, up from 36-38 percent at the peak.
This is a signal that altcoins have fallen more than Bitcoin. Data from Coinmarketcap suggests that Bitcoin has fallen by about 15 percent on a weekly basis.
Market experts have stated that the recent mayhem in technology stocks has caused a drop in cryptocurrency value. Tech-heavy Nasdaq Composite has dropped by about 25% in 2022.
Bitcoin recorded a significant drop over the past week after a rise in interest rates. This is an indication that cryptocurrency investors and institutions have paused a bit.
Darshan Bathija, the chief executive of Singapore-based crypto exchange Vauld, told Bloomberg, “In light of fears of rising inflation, most investors have taken a risk-off approach—selling stocks and cryptos alike in order to cut down risk.”
Last week, central banks across different countries in the world, including the US, UK, India, and Australia raised interest rates in a bid to tackle the rising prices.
The US Federal Reserve increased the key lending rate by half a percentage point, causing the highest rate hike in over 20 years. There are also worries among crypto investors over recession fears.
According to Subburaj, there can be an extended consolidation period that can lead to Q3 2022, with Bitcoin retesting its 12-month lows below $30,000.
“Investors will be better off to stack cash and wait for signals of a reversal before allocating fresh capital to crypto. Patience will be key. We anticipate a strong Q4 2022 for crypto assets,” he said.