In the latest example of cryptocurrency's continued volatility, top digital currencies Bitcoin and Ethereum have seen their prices drop drastically since the start of the year, following remarks from the US Federal Reserve that it may raise interest rates.
Bitcoin in particular, the world's most popular cryptocurrency, is currently embroiled in its worst slump in four years, having lost nearly 40 percent of its market value in a mere two months.
The popular coin saw its death spiral fall to as far as $39,558 on Monday, dipping below a crucial $40,000 resistance marker for the first time since September 2021.
Bitcoin saw its market price fall to $39,558 on Monday amid the recent crypto crash, dipping below a crucial $40,000 marker for the first time since September 2021
Ethereum - the second-largest digital coin - slumped 2.76% to $3,020.16 after briefly dropping below the key $3,000 level, seen for the first time back in May 2021
It is nearing what market analysts commonly refer to as the 'death cross,' a bearish indicator which occurs when the 50-day moving average dips below the 200-day moving average, and could mean bitcoin is entering a bear market.
With that said, Ethereum - the second-largest digital coin - has followed suit falling 2.76 percent to $3,020.16 after briefly dropping below it's key level of $3,000, seen for the first time back in May 2021.
A tumultuous year for the coin saw it fall below $2,000, before reaching its all time high, nearly $4,900 in November. This level of volatility has long been a blessing and curse for crypto enthusiasts looking to enter or exit the market.
Broader market uncertainty has taken its toll on crypto as investors look sell off riskier assets while awaiting a decision regarding the Federal Reserves proposed rises in interest rates.
'The minutes from the Fed have increased expectations that the central bank of the world's largest economy will now move faster to raise interest rates to fight soaring inflation,' said Nigel Green, chief executive and founder of deVere Group.
'As a result, there's been a knee-jerk sell-off on Wall Street and the crypto market as it is perceived by some traders that such a move puts at risk the liquidity that has benefitted many asset classes, including bitcoin.'
Bitcoin is a cryptocurrency – an online type of money which is created using computer code
Ethereum, like Bitcoin, is a digital token used on a digital database called a blockchain. It has gained prominence as a popular method to pay for NFTs (Non Fungible Tokens)
Some crypto experts believe that low interest rates and government stimulus packages have created a bubble in the crypto market that is ready to burst if investors do not have as much faith in crypto as recent meteoric gains have suggested.
