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In November last year, the bitcoin price peaked at 69,000 dollars. Since then, the world’s most important and largest cryptocurrency has been in free fall. And on Friday, the downturn intensified further with a fall of over ten percent.
Saturday morning, a bitcoin costs just over 35,000 dollars. The fall in value since November is thus well over 40 per cent.
The second largest cryptocurrency, ethereum, has fallen by 15 per cent in the last 24 hours. In the last week, the currency has fallen 25 percent. Ethereum has also fallen by more than 40 percent since its peak last autumn.
Followed Wall Street down
The cryptocurrency crash followed the downturn on Wall Street. The Nasdaq Composite lost 7.6 percent this week, and the S&P 500 fell 5.7 percent and had its third weekly decline in a row. Rising prices have led investors to throw positions in more risky holdings, writes CNBC.
The ten-year yield on US government bonds, often referred to as the US ten-year bond, is also at its highest in two years.
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The interest rate rose to over 1.9 percent this week. The US Federal Reserve has also indicated that it plans to raise interest rates more than expected and reduce support purchases.
Bitcoin should act as a hedge against rising inflation, when it is a result of government stimulus, but analysts say that the risk is that a more hawkish Federal Reserve can take the wind out of bitcoin’s sails, writes CNBC.
– It was a bit disappointing not to see bitcoin react more positively to the reversal in government interest rates, says senior market analyst Edward Moya in the currency trading company Oanda to CNBC.
Digital currencies under pressure
According to CNBC, several experts warn that increased regulatory scrutiny in several countries and intense price fluctuations are dampening the outlook for cryptocurrencies.
China bans all crypto-related activities. US authorities are also cracking down on certain aspects of the market. And Russia’s central bank this week proposed a ban on the use and extraction of cryptocurrencies on Russian territory. The central bank believes that the digital currency poses a risk to financial stability and monetary sovereignty.
Russia is among the three largest countries for the extraction of bitcoin after the United States and Kazakhstan.
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