Cryptocurrencies resumed their rollercoaster start to the year, dashing yesterday’s slim hopes of a fight-back, as markets tumbled across the world after the US Federal Reserve hinted at a string of interest hikes in the year ahead.
Bitcoin fell 4.23%, at US$36,505, giving up all of Wednesday’s gains, as fears grow it could resume its flirtation with the key US$32,500 level. Ethereum was 3.34% lower at US$2,403 – trading below its own psychologically important US$2,500 price tag.
The world’s two leading digital tokens have slumped over 50% since record highs in November as investors seek safe havens from rising inflation and amid fears of tightening global regulation. The falls have mirrored a volatile ride on stock markets as concerns over the health of the global economy mount.
“It seems that the Bitcoin rally is fading again as the bulls have failed to push the price above US$40,000,” said Naeem Aslam, a market analyst at Avatrade.
“It is highly likely that we may re-visit the recent support of US$32,500,” Aslam said.
No alt-coins were spared the sell-off. Solana, Terra and Avalanche, which make up the top 10 cryptos by market cap, all slumped nearly 8%.
Despite being seen by some as a hedge against inflation, crypto markets have been taking a battering after hitting all times high in November.
A large portion of those losses have been made since the turn of the year, with Bitcoin down 24% and Ethereum down 36% in January alone.
Investors were further shaken yesterday after the Fed chair admitted borrowing costs would rise soon.