The crypto assets they lost almost $800 billion in market value over the past month, touching a low of $1.4 trillion on Tuesday, according to the data site CoinMarketCapsince the end of the expansionary monetary policy reduces the appetite for risky assets.
The bitcoin, which accounts for nearly 40% of the cryptocurrency market, hit a 10-month low on Tuesday, before rallying to as high as $31,450, just six days after hitting $40,000. It was trading down more than 54% from its Nov. 10 all-time high of $69,000.
Digital asset prices have tumbled, in line with equities on fears of aggressive interest rate hikes around the world to stave off inflation at multi-decade highs. The nasdaqwith a high technological component, falls 28% from its historical maximum of November 2021.
The total value of the cryptocurrency market was $2.2 trillion on April 2, a far cry from its all-time high of $2.9 trillion in early November, according to CoinMarketCap.
“Bitcoin remains highly correlated to broader economic conditions, suggesting the road ahead could unfortunately be rocky, at least for the time being,” blockchain data provider Glassnode said in a note.
Signs of weakness in stablecoins, which are typically safer, further spooked investors. TerraUSD, the world’s fourth largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.
Despite the drop in the price of bitcoin, funds and products linked to it recorded inflows of $45 million last week, as investors took advantage of price weakness, according to digital asset manager Coinshares in a report published on Tuesday. monday.
“A huge amount of liquidity has inflated some of these cryptocurrencies,” said Sebastien Galy, senior macro strategist at Nordea Asset Management. Galy expects cryptocurrencies, also correlated to high-growth stocks, to come under pressure as various central banks tighten monetary policy.