The only constant for Bitcoin has been its recent drop. Riskier assets have fallen all over the world as a result of the US Federal Reserve’s efforts to remove support from the market.
Bitcoin, one of the world’s most valuable digital commodities, fell more than 12% on Friday, falling below $36,000 for the first time since July. Bitcoin has dropped more than 45 percent of its value since its high in November of last year. Other digital currencies, such as Ether and meme coins, have also experienced a similar fate.
Since its peak, Bitcoin has lost more than $600 billion in market value, while the total crypto market has lost more than $1 trillion.
Although there have been multiple considerably larger dips for both Bitcoin and the aggregate market, the present events reflect the second-largest ever decline in terms of the dollar for both, according to Bespoke Investment Group.
It illustrates the magnitude of value destruction that percentage reductions can obscure… Of course, crypto is subject to these types of selloffs due to its historically higher volatility, but given how enormous market caps have gotten, the volatility is worth considering both in raw dollar terms and in percentage terms.
The Federal Reserve’s plans have shook both the cryptocurrency and stock markets, with cryptocurrencies twisting and turning in a similar way to equities.
Stephane Ouellette, the Chief Executive and Co-Founder of institutional crypto-platform FRNT Financial, said in a statement to Bloomberg:
Crypto is reacting to the same forces that are affecting risk assets around the world. Unfortunately, there is so much cross-correlation within the crypto asset class for some of the older projects like BTC that it’s practically a given that it will collapse, at least temporarily, in a broader alt-coin valuation contraction.
According to Bloomberg, crypto-centric companies plummeted on Friday as well, with Coinbase Global Inc. losing roughly 16 percent and falling to its lowest level since its inception in the spring of 2021. MicroStrategy Inc. dropped 18% as well. Because of the enterprise software company’s Bitcoin resources, its stock has become a proxy for the digital currency.
On the other hand, the Biden administration is preparing to present a first government-wide strategy for digital assets early next month. According to those familiar with the situation, the administration intends to charge federal agencies with assessing the dangers and opportunities they face.