The price of digital assets has fallen along with the drop in inequities. Bitcoin fell to a 10-month low on Tuesday before recovering to $31,450. On April 2, the total crypto market value was $2.2 trillion, a far cry from its all-time high of early November.
In the preceding month, global crypto-asset holdings plummeted by $800 billion. The elimination of easy money diminished the demand for risk assets. On Tuesday, bitcoin plummeted to a 10-month low before rebounding to $31,450. It had fallen by more than 54% since its peak of $69,000 on November 10th.
In one month, cryptocurrency assets lost $800 billion in market value
Global crypto asset holdings fell by $800 billion in the previous month, according to statistics portal CoinMarketCap, as the end of free monetary policy reduced interest in risk assets. Bitcoin, which accounts for roughly 40 percent of the cryptocurrency market, fell to a 10-month low on Tuesday before recovering to $31,450, only six days after breaking through the $40,000 barrier for the first time. It had dropped by more than 54 percent since its peak of $69,000 on November 10th.
Investors grew concerned when they noticed symptoms of weakness in stablecoins. After losing its dollar peg, TerraUSD, the world’s fourth-largest stablecoin, lost a third of its value on Tuesday.
Despite the dip in the price of bitcoin, funds, and products linked to it received $45 million in inflows last week as investors took advantage of market weakness, according to a report released on Monday by digital asset manager Coinshares.
“A massive amount of liquidity has inflated several of these cryptocurrencies,” said Nordea Asset Management’s senior macro strategist Sebastien Galy. He expects crypto to experience pressure as central banks tighten monetary policy.
Global stocks have taken a beating in May, with high-growth companies bearing the brunt of the damage as investors anticipate that major central banks may raise interest rates quickly to tackle inflation. On Wall Street, the tech-heavy Nasdaq dropped more than 4% on Monday.
“We’re at a period where liquidity is being withdrawn and hope is being confronted with reality, which makes things difficult,” said Nordea Asset Management’s Sebastien Galy, senior macro strategist. “People may buy on the fall for tactical reasons, but it doesn’t mean it’s desirable.”
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