For the second time in two weeks, Bitcoin has dipped below $40k, this time edging closer to the $38k support
The crypto market crashed during the morning session today in its entirety, with dollar-pegged stablecoins being the only survivors. The data provided by CoinMarketCap indicate that Bitcoin, which had gained close to $43,000 on Thursday, fell to a six-month low of $38,560. At press time, the pioneering cryptocurrency quote was below $39k, having lost 7.68% in the last 24 hours.
Along with Bitcoin, Ethereum is also feeling the pinch in the market. In the last 24 hours, the second most valuable digital asset fell to a low of $2,827.70. At press time, the coin is changing hands slightly above that figure at $2,880.22 but is still down 8.34% on the day.
Altcoins also in red
The going hasn’t been easier for other major altcoins, with most seeing a larger scale of losses than the two leading cryptocurrencies. The market slashed the value of Binance’s BNB, Cardano’s ADA, and Avalanche’s AVAX by as much as double digits.
Overall, markets rallied as much as 11% in capitalization, falling below the $2 trillion points for the first time in four months to hit $1.92 trillion, according to CoinGecko. The crypto ‘fear and greed’ index also fell to an extreme fear level of 19, further illustrating the current bearish mood. Following the market crash, more than 180,000 traders had their positions liquidated.
The recent Russian proposal, among other factors, likely triggered the sell-off.
It is unclear what caused the drop, but it is believed that the Russian central bank’s proposal to ban cryptocurrencies in a report published yesterday had something to do with the drop. Regulators raised the need to ban the use and mining of cryptocurrencies to protect the financial stability of the country.
However, global stock markets have also been affected by the turn of the week, meaning there could be a much bigger but still unseen reason for the drop.
Cryptocurrency and Galaxy Digital advocate Mike Novogratz earlier this month predicted that Bitcoin could bottom at $38,000. Novogratz told CNBC that Bitcoin could hold at this crucial support, and days later warned that rising bond yields will put even more pressure on cryptocurrencies and stocks.
The Federal Reserve Indian in the minutes of a mid-December meeting released earlier this month that it could be changing monetary policy to shift interest rates higher in line with treating the scourge that is inflation.
Today’s drop does not benefit the crypto markets that are already in crisis. The markets have seen steady weekly outflows over the last five weeks, a figure whose total reached $532 million this week. It will make a big move to reverse this trend.