Bitcoin and Ether tumble as $130 billion wiped out cryptocurrency markets

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A representation of the virtual currency Bitcoin is seen in front of a stock chart in this illustration taken May 19, 2021.

Given Ruvic | Reuters

The cryptocurrency market lost an estimated $130 billion in the past 24 hours as major digital coins continued selling for several days.

Bitcoin was last down around 4% at $33,755.57, according to Coin Metrics, the lowest level since July 2021. Bitcoin is around 50% off its November high.

Ether plunged 7% to $2,239.08, its lowest level since late July, according to Coin Metrics. Ether is down around 51% from its all-time high in November 2021.

Cryptocurrency moves have been correlated with the selling off of high-risk assets such as tech stocks, as investors brace for tighter monetary policy from the US Federal Reserve and rising interest rates. higher interest.

“BTC (bitcoin) and crypto have reacted much more violently given the nature of the asset class and we are likely to test 30-32K given current sentiment and momentum,” Vijay Ayyar, VP president of corporate development and international expansion, told CNBC via text message.

Ayyar said if bitcoin held above $30,000 over a longer period, like a week, then there could be a base formed at those levels before the market moves higher.

“But for the market to be truly bullish, it will take some time, given the lack of confidence across the spectrum,” Ayyar added.

Investors are also grappling with higher inflation. Bitcoin proponents often suggest that the digital coin is an inflation hedge, but this theory hasn’t held up so far. Analysts said there were concerns that a more hawkish Fed could cut the wind from the sails of the crypto market.

Meanwhile, investors are also weighing the impact of additional regulation on the cryptocurrency market. Last week, Russia’s central bank proposed banning the use and mining of cryptocurrencies.

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