Cryptocurrencies have been in a bloodbath.
plunged to as low as $20,834 late Monday, the lowest level since December 2020 and down about 70% from its all-time high in November. The No.1 cryptocurrency is trading at around $22,407 Tuesday, down 5% over the past 24 hours, according to CoinDesk data.
plummeted to as low as $1,075, down 78% from its all-time high.
The mayhem comes amid a broad selloffs of risk assets. On Monday, the Dow Jones Industrial Average
fell almost 900 points, while the S&P 500 index
entered a bear market. The Nasdaq Composite
What’s more, investors are fretting over the news that crypto lending platform Celsius paused all withdrawals from customers and transfers between accounts, only one month after blockchain Terra’s collapse shook investors’ confidence on some crypto projects.
Still, the majority of the crypto crash “has to do with macro, because crypto markets have been diving down since the latest CPI figure,” which was released on Friday, Gritt Trakulhoon, investment analyst at Titan, said in an interview. The U.S. cost of living jumped 1% in May, pushing the rate of inflation to a 40-year high of 8.6%, while showing no signs to slow down.
“I think it is all macro,” Bill Barhydt, chief executive at crypto financial service provider Abra, said in an interview. “We have extreme fear in the markets right now. The market has priced in several rate hikes plus they’ve started to price in a severe recession…we’re in complete risk off mode for all assets, just in the same way we were in risk-on mode,” Barhydt said.
Anthony Scaramucci, founder and managing partner at SkyBridge Capital, held a different opinion. “If the US market is going down 3% or 4%, could crypto go down 5% to 7%? Certainly. But I think this outsized drop is the result from the selling pressure that Celsius put on the markets,” Scaramucci said. Bitcoin lost 18% on Monday.
Some analysts expect the slide to continue. The next key support stands at around $19,666, which is close to the 2017 high, according to Michael Boutros, strategist at DailyFX.
Currently, bitcoin “is looking to form a local bottom between the $20-$22k range, with a potential bounce towards $26k, however, the likely scenario is that price will further fall below towards $14-$17k range where a cyclical bottom can potentially form,” Abdul Gadit, chief financial officer and co-Founder of Zignaly wrote in an email.