Things are not looking up for cryptocurrency investors.
Prices continue to fall and it is not about to stop.
Bitcoin, the king of digital currencies, has just fallen to its lowest level for a year and a half. Bitcoin was trading around $25,344.41 at the time of writing, according to data firm CoinGecko. Earlier, prices had fallen to $24,903.49, levels not seen since December 2020.
The digital currency has lost more than 62.9% of its value since its all-time high set last November at $69,044.77.
Overall, the crypto market has lost $2 trillion since November and has a market value of $1.07 trillion now, compared to $3 trillion just eight months ago.
The narrative has not changed.
Investors fear that the Federal Reserve (Fed) will be more aggressive in its monetary policy. In other words, they are worried that the central bank will raise its rates sharply to fight inflation, which is at its highest in 40 years.
The gallon of gasoline at the pump crossed the symbolic threshold of $5 dollars at the end of the week on average across the country.
The problem is that this fight against inflation risks having a big impact on the economy and pushing it towards recession, experts have already warned. It is this double concern that cools investors and pushes them to liquidate risky and volatile assets such as cryptocurrencies.
Ether Is Down 72.6% Since November
The crypto sphere has also seen its old demons reappear. The sudden collapse of UST and Luna coins last month also reminded investors that the industry was still too young.
UST, or TerraUSD, a so-called stablecoin, lost its dollar peg when millions of investors all wanted to redeem their tokens at the same time.
A stablecoin is a digital currency whose value is pegged to a stable reserve asset, like the U.S. dollar, the euro or gold. Stablecoins are supposed to be backed by assets in dollars or euros whose fair value must be at least equivalent to the number of coins in circulation.
The debacle of UST and Luna, which are sister tokens belonging to the Terra ecosystem, caused more than $55 billion in losses for investors.
Besides Bitcoin, other digital currencies are also down sharply. This is the case of Ether, the second cryptocurrency by market value. Its price is now at $1,333.68, far from the $4,878.26 reached in November. Ether has lost 72.6% of its value since November 10.
Cardano, Solana, two up-and-coming decentralized finance ecosystem tokens were down 9.4% and 12.7% respectively in the last 24 hours.
The price of Dogecoin and Shiba Inu, the famous meme coins, were down 10.6% and 6.5% respectively.
