The world’s largest cryptocurrency Bitcoin slipped below $19,000 on Wednesday, its lowest level since June. The recent development comes following a chain of drops in the stock and cryptocurrency markets alongside the increasing strength of the US dollar.
Bitcoin’s market cap also slipped below its $1 trillion market cap as the market saw mass sell-offs of various digital coins.
Factors such as the alarming inflation alongside tightening monetary policy around the world are affecting markets. The US Federal Reserve has embarked on a series of interest rate hikes totaling 2.25 percentage points, and markets are expected to be affected by further interest rate hikes. The US dollar has also strengthened as a result of policy tightening.
Bitcoin has some correlation with stocks, so if the stock market suffers a setback, so does the cryptocurrency market. According to Vijay Ayyar, Luno’s Vice President of Corporate Development, “The macro environment also continues to prove difficult with the dollar continuing to put in highs. This impacts all risk assets as we can see. If we see the dollar start to move back down, then we should be able to get risk assets such as bitcoin move back up again.”
This year has been a tough one for the entire cryptocurrency market. The market has seen almost $2 billion wiped off since its November peak. Bitcoin is also 60 percent off its November record high of $68,990.90. The development in the crypto market has created not only a tough environment for risk assets but has also sent some crypto platforms into bankruptcy.
Since June, Bitcoin has been shuffling between $18,000 and $24,000. “Bitcoin typically likes to go back and test previous lows to see if they hold as support,” Luno’s Vijay Ayyar said. He added that unless Bitcoin slips below $17,500 the market is likely to fluctuate within this range before recovering eventually.
Currently, ether and alternative coins have risen above Bitcoin. Ether has upended Bitcoin since both cryptocurrencies hit a low in June. “Ethereum hit yearly highs against the bitcoin pair in anticipation of the merge. Hence there has been a lot more interest and activity in the Altcoin space, while Bitcoin consolidates,” Vijay Ayyar explained.
As of the time of writing this article, Bitcoin was trading at $18,803.80 while Ether was trading at $1,518.87.