Bitcoin trades at $20,880 on the crypto meltdown with a 69% from life-highs. BTC prices are at multi-month lows, trading at levels last seen in November 2020.
Bitcoin Slips to $20,880 on Crypto Meltdown
It was a crypto-mania that attracted investors and users to the crypto market. New startups flourished, and virtual currencies were on the uptrend within a short period.
But now, the crypto industry worth billions of dollars is spiraling downwards, leaving crypto owners bewildered by the sudden volatile downtrend. Crypto investors are pulling out money from the crypto sector amid soaring inflation and a hike in interest rates. The stock market crash is affecting the crypto segment too. There is a global meltdown as economic activities are slowing down.
Users are losing their savings and investments. Crypto prices are almost crashing down. Stablecoins were considered the least volatile in the crypto market. But stablecoins were the first to move lower with high volatility, shocking investors who gave preference to stablecoins while making investments.
Bitcoin, the leading cryptocurrency, is trading at the 20,880 level, as its value nose-dived. Bitcoin prices are at levels last seen in November 2020. Ethereum, the second-largest cryptocurrency in market value, is trading at $1,105 on Thursday, June 2021. It is trading at levels last seen in January 2018.
During the pandemic and lockdown in 2021, BTC prices were trading at life-high values of $68.990. But now, with high inflation and a hike in interest rates, the crypto meltdown is wiping out investor money. BTC prices have fallen almost 69.7% from their highest value. Ethereum went to a life-high value of $4,864 in November 2021, but it has lost almost 77.2% from its highest level in the current meltdown.
Stablecoins were some of the first cryptos to move downwards. TerraUSD and Tron USDD were a few stablecoins that slipped from the Dollar peg. TerraUSD prices slipped to near zero in May as its value slid against its Dollar peg. USDD prices are at $0.98 at press time. Terra USD investors lost almost $60 billion in just a week as USDT prices slumped in the crypto market.
Investors sold almost $1.6 million of Tethers USDT to protect their digital investment money. The circulating supply came down to $70.03 billion, from the total supply of 79.71 billion. Tether USDT is at $0.9994 during trading hours on Thursday, June 16, 2022.
High Inflation and Interest Rate Hike Cause the Crypto Crash
High inflation is the cause of the downward slide in the crypto market. Commodity prices are increasing, and crude prices have soared higher. The Russia-Ukraine war is the cause of the rising inflation. Countries got battered by the pandemic and lockdown restrictions in 2020 and 2021. Now the Ukraine war is adding fuel to the fire, as supply constraints are keeping inflation high.
Inflation in the US has hit a 41-year high. The energy crisis is leading other sectors to a price rise. Crude prices are at $118 per barrel. Shortage of food grains like wheat and sunflower oil has caused a surge in commodity prices. The Ukraine-Russian war has hit global economies directly, as Russia and Ukraine are the chief producers of wheat, corn, and sunflower oil.
Stock Market Crash
Both the stock and the crypto market are on a bearish trend. Analysts predict a prolonged slump in the stock market and a sell-off in the crypto market. There is a strong link between the equity markets and the crypto markets. The downtrend in the stock market is affecting the crypto prices, pulling the market to an 18-month low.
The crypto markets are moving in tandem with the stock market. The digital coins do not have a sustainable base and do not come under any regulatory authority, unlike the stock market. Cryptocoins work on a network of computers and have come under a lot of stress as increased volatility force investors to pull out their money. The crypto industry is under pressure alongside the stock market.
The New York Times has reported that BTC price movement is closely related to NASDAQ, the benchmark index in the US. The stock market saw a massive sell-off as the Fed raised rates again in 2022. The Fed is on an aggressive strategy to tame the high inflation in the country.
Global Crypto Market
The global crypto market has come down below $1 trillion on the crypto slump. It is at levels last seen in January 2021. The global market cap decreased 11.23% from yesterday.
Leading cryptocurrencies like Bitcoin, Ethereum, Cardano, Dogecoin, and Polkadot lost almost 9% from the previous day. There is a massive sell-off in major risk assets like the crypto and stock market as inflation is pulling down economic growth.
Bitcoin dominance fell to 45.28% as heavy selling pressure forced investors to pull out their investment money.