Cryptocurrencies Sell Off, Bitcoin Drops 9%, Ethereum Drops 12%

Tram Ho

Analysts say investors are dumping cryptocurrencies along with tech stocks in an attempt to get out of risky assets before the US Federal Reserve looks to pivot to monetary policy. currency and raise interest rates. At the same time, the inflation threat continues to grow, meaning the real rate will remain low to negative.

Bitcoin on January 21 at one point dropped more than 9%, trading at $37,839, before recovering to around $38,000. At current levels, Bitcoin is 45% below its all-time high reached last November, at $69,000. Year-to-date, Bitcoin is down more than 20%.

Tiền điện tử bị bán tháo mạnh mẽ, Bitcoin giảm 9%, Ethereum giảm 12% - Ảnh 1.
Bitcoin has returned to the price of August 2021.

Ethereum, the world’s second-largest cryptocurrency, also plummeted more than 12% in the past session, to $2,749, down 44% from its all-time high of $4,878. Year-to-date, Ethereum is down nearly 30%.

Among other cryptocurrencies, Cardano is also down 13%, Solana is down 15%, dogecoin is down 10% and Shiba Inu is down 12%.

The cryptocurrency market capitalization has suddenly plummeted.

Tiền điện tử bị bán tháo mạnh mẽ, Bitcoin giảm 9%, Ethereum giảm 12% - Ảnh 2.
Total market capitalization (Source: tradingview.com)

The fact that cryptocurrencies started the new year badly because of the Fed’s change of attitude, reflected in “hawkish” words, made the market predict that the Fed will have 4 interest rate hikes and balance sheet. accounting this year.

Yields on US Treasuries recently surged to a 2-year high, triggering a massive sell-off in equities and cryptocurrencies. The Nasdaq stock index fell 9.7% this week, its biggest drop since October 2020.

Even the crypto bulls don’t expect the cryptocurrency to recover, until the stock rebounds. Galaxy Digital founder and crypto billionaire Mike Novogratz both tweeted on January 20: “Cryptocurrency will have a hard time until stocks regain momentum. That proves that crypto is already there. a decent sell-off.”

Mr. Novogratz emphasized the sharp decline of the Russell index, which is down more than 10% so far. “The market is in a bear market right now. Sell things that used to go up and make a profit, don’t buy things that are falling.”

The increasing use and acceptance of Bitcoin in high-inflationary economies creates a confusing market picture, leading to a lack of direction and momentum that determines Bitcoin price trends ,” said Jason Deane, analyst. economic analysis by digital asset research firm Quantum said. Mr. Deane predicts that ” trading without direction ” will continue in the short-term, not ruling out the possibility of the cryptocurrency falling further.

Several other pieces of information also negatively affected the cryptocurrency market.

Regulators in the United Kingdom, Spain, and Singapore this week proposed strengthening regulations on advertising crypto assets for inexperienced investors, while Russia’s central bank entered the Thursday proposes a complete ban on cryptocurrencies (including a ban on both mining and trading). But analysts say the impact of this issue will be limited because “” Russia could be an important location for mining, not for trading. And I think Russia has banned the use of cryptocurrencies – i.e. use in payments. I suspect many Russians hold crypto in accounts abroad ,” said Bannockburn Global Forex chief money market strategist Marc Chandler.

Last year, China stepped up its ‘suppression’ of cryptocurrencies, banning all transactions, as a result, miners began to focus on Eastern Europe, and Russia became the 3rd largest market for mining. Bitcoin mining, after the US and Kazakhstan.

Markets reacted badly to a warning from the Central Bank of Russia that the rise of cryptocurrencies threatens retail investors. The creation of digital assets may soon be banned along with allowing transactions and owning of Bitcoin.

Soon after, electricity-related stocks in Europe plummeted. Shares of Argo Blockchain are down 10.76%, Arcane Crypto is down 4.43%, Northern Data is down 5.74% and Online Blockchain is down 7.49%.

Some analysts predict the Bitcoin price will fall further. Invesco this week warned that Bitcoin could fall below $30,000 this year, due to similarities between today’s crypto marketing campaigns and the practices of stockbrokers before the Great Recession. .

Euro Pacific Capital chief economist Peter Schiff said he does not rule out the possibility of Bitcoin falling below $10,000. “Bitcoin has finally broken the ‘neckline of the head and shoulders’ to drop back below $30,000. Once that level is broken, Bitcoin will complete a major double bottom. From there, it’s highly likely that a breakout will occur. trying to get below $10,000.”

However, if Bitcoin bounces back and breaks through the key resistances of $39,500 and $40,000, a wave of recovery could begin.

References: Cryptonews, Kitco, Coindesk

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Source : Genk