By John Ikani
Bitcoin tumbled below $24,000 on Monday, hitting its lowest level since December 2020, as investors dump crypto amid a broader sell-off in risk assets.
The world’s most popular cryptocurrency dived about 10 percent to hit $23,900 in morning London deals, striking a level last seen in December 2020.
Over the weekend and into Monday morning, more than $200 billion had been wiped off the entire cryptocurrency market.
The cryptocurrency market capitalization fell below $1 trillion on Monday for the first time since February 2021, according to data from CoinMarketCap.
Why is crypto crashing?
The blood bath seen in the market all through the year began in January as asset whales began selling of their holdings in what is termed as whale redistribution.
Asides from the Russian – Ukraine war, the selloffs then got intensified when the U.S. Fed hiked its interest rate to 1%, the largest increase since 2000, as it handed down its policy decision in May.
World stock markets have plunged since Friday when data showed US inflation at a fresh four-decade high, increasing recession fears.
“The correlation between the equity markets and bitcoin continues to” gain strength, said AvaTrade analyst Naeem Aslam.
Macro factors are contributing to the bearishness in the crypto markets, with rampant inflation continuing and the U.S. Federal Reserve expected to hike interest rates this week to control rising prices.
Last week, U.S. indices sold off heavily, with the tech-heavy Nasdaq dropping sharply.
Bitcoin and other cryptocurrencies have tended to correlate with stocks and other risk assets. When these indices fall, crypto drops as well.
The virtual unit has collapsed 65 percent in value since striking a record peak in November 2021.