In the early hours of Tuesday morning, the price of Bitcoin (BTC) briefly slipped below $21,000, making it the 52-week low for the world’s largest cryptocurrency by market capitalization.
Bitcoin briefly fell below $21,000 to lows of $20,950, according to data from CoinMarketCap, on Tuesday before bouncing back slightly to around $22,620, continuing its plunge as investors sold off risk assets.
The world’s largest cryptocurrency fell around 10% in the past 24 hours, while Ethereum tumbled more than 6% over the same period, according to CoinMarketCap. With a current market capitalization of $430 billion, Bitcoin is down over 66% from its all-time high of $68,789 recorded in November 2021.
Bitcoin leads liquidation in the cryptocurrency market with $531.62 million liquidated over the past 24 hours, according to data from Coinglass.
The Bitcoin fear and greed index hit 8 out of 100, its lowest level since May 2022, suggesting extreme anxiety in the market.
Earlier today, Ethereum (ETH), the second-largest cryptocurrency, dropped to $1,094.70, recording a 52-week low. Ethereum is currently trading at $1,220, up 1.3%.
Nirmal Ranga, head of trading and technical analysis at crypto exchange ZebPay, said in his interview with CNBC, “Everything is on fire right now, be it the equities, be it the crypto assets or anything.”
“What you see in the market is … fear, uncertainty, and doubt. Technically, markets look oversold, and there has to be some floor that we’re going to hit in bitcoin in the coming future,” Nirmal said
Why did Bitcoin Crash?
The primary reasons behind today’s bearish price actions are growing global inflation rates, the U.S Federal Reserve rate hikes, Celsius and Binance stopped withdrawals, and some companies cutting jobs.
On Monday, Celsius announced that withdrawals, swaps, and transfers between accounts would be halted due to “extreme market conditions” and that the move was meant to “stabilize liquidity and operations.”
Meanwhile, Binance, the world’s largest crypto exchange, halted bitcoin withdrawals for over three hours on Monday “due to a stuck transaction causing a backlog.” These two significant events caused a backlash on Bitcoin, making the crypto market lose around $200 billion recently.
The inflation rate is also a global phenomenon, with all significant economies facing inflation. The U.S. inflation rate hit a 40-year high of 8.6%, but America isn’t alone. The inflation rate of European countries, including Germany (7.9%), France (5.25%), Netherlands (8.8%), and the United Kingdom (9%), shot up in May 2022. The increasing inflation rate globally is fueled by the rising fuel costs and changing supply-chain dynamics resulting from Russia’s ongoing invasion of Ukraine.
According to Wall Street Journal, the U.S Federal Reserve is expected to implement a 0.75% percentage point rate hike as a method to control inflation, which would tremendously increase bond yields.
