In October 2021, Bitcoin had broken its April high of $64,900 and surpassed $65,000. The world’s largest digital currency was up 3% to an initial high of $66,024.99, beating the previous record set in mid-April. However, things are no longer looking so good for cryptocurrencies.
As announcements show the Federal Reserve planning to withdraw stimulus from market, riskier digital currencies around world are facing negative consequences, Bloomberg reported. Bitcoin, for example, fell more than 12% to below $36,000 on Friday, its lowest level since July. .
The asset is now estimated to have lost more than 45% of its value since peaking in November. And its not the only one: Other digital currencies like ether have also seen significant drops in value, highlighting a worrying trend.
In fact, according to Bespoke Investment Group, it is now estimated that more than $1 trillion has been lost across the crypto market. “It gives an idea of the value destruction that percentage declines can mask,” analysts at Bespoke said in a note. .
“Crypto is of course prone to these types of sell-offs as it has a history of inherently higher volatility, but given the large market cap have gotten, It’s worth thinking about volatility in both dollar & percentage terms.
The Biden administration has announced that starting next month they will roll out a government strategy for digital assets, and assign federal agencies the difficult task of evaluating the risks & opportunities associated with these assets. Will this be enough to stabilize crypto markets? Probably not at the moment because the concern is too high.
“Bitcoin is being gripped by a wave of risk appetite. Keep an eye on traditional markets for more clues,” Antoni Trenchev, co-founder and managing partner of Nexo, told Bloomberg. “fear & unease among investors is palpable.