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Bitcoin Tumbles to Lowest Price Since July 2021 as Market Panic Grows
Cryptos slumped across the board all weekend and added to declines Monday morning as global equity markets swooned.
Updated May 11, 2023, 5:25 p.m. Published May 9, 2022, 12:18 p.m.
The reality of tighter monetary policy continues to be felt in all markets, including crypto, with the price of bitcoin (BTC) – which days ago topped $40,000 – falling to as low as $32,500.
Bitcoin lost the critical support level of $40,000 last week and did not hold above subsequent support levels at $38,000 and $35,800. It could drop to as low as $31,500 if current levels fail to hold.
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Crypto majors followed bitcoin’s drop: Ether (ETH) lost 8.7% in the past 24 hours, while Cardano’s ADA (ADA) and Solana’s SOL (SOL) dipped as much as 10%. Memecoin shiba inu (SHIB) took an even bigger hit with a 13% fall.
Liquidations on crypto-tracked futures exceed $411 million in the past 24 hours, data shows. Of that, some $140 million arose from bitcoin futures, and $121 million came from ether futures.
Bitcoin’s initial weekend declines came alongside TerraUSD (UST) losing its peg to the dollar. The fall added steam on Sunday evening as Asian equity markets and U.S. stock index futures opened sharply lower, with fears continuing to grow about the monetary response to surging inflation. Japan’s Nikkei ended the day 2.5% lower, Europe's Stoxx 600 is down 2% at midday, and Nasdaq futures are down 1.5%.
The U.S. dollar, meanwhile, continues to benefit from panicky markets, with the Australian dollar and Indian rupee notable losers today.
Analysts previously warned about a drop in bitcoin prices if the broader economic outlook continued to sour. “Professional money managers aren't loading up on high-risk growth assets currently,” said Kurt Grumelart, a trader at crypto fund Zerocap, in a Telegram message last week. “You can't look past current headwinds and high correlation to traditional markets,” he added at the time, warning about bitcoin’s current price correlation with U.S. markets.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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