By Cristian Bustos. Originally published at ValueWalk.
Bitcoin dived 5% Monday after dropping over the weekend, placing the $32,000 price 50% below its record price from last year. The plunge also means the cryptocurrency has plummeted 15% in the last week, with other assets also taking major hits.
As reported by CNN Business, bitcoin’s latest drop has spread to other altcoins such as ethereum, solana, and cardano, which have also dived by 15% in one week. Elon Musk-backed dogecoin also stumbled by 10%.
The drop goes to show how bitcoin is also affected by the same factors that plague stocks in times of volatility.
Michael Kamerman, CEO of trading platform Skilling, said: “Volatile trading in digital assets has not been that unusual in previous years. Cryptocurrencies are increasingly moving in sync with tech stocks with investors treating both as risk assets and often retreating to safer corners of the market during bouts of market volatility.”
However, Kamerman remains confident in the long term as big hedge funds are betting on cryptocurrencies, and central banks and financial institutions are beginning to accept transactions.
Crypto Stocks On A Dive
Kamerman asserts that, while this is a positive outlook, “bitcoin is not immune to the global inflation risk spreading across most other asset classes. Therefore we should expect to see the downward trend continue.”
A key factor in bitcoin’s latest blues is the U.S. Dollar Index trading closer to previous records, as altcoin supporters turn dollar frailties into bullish sentiment for crypto.
Inflation concerns and fears of a tighter monetary policy by the Federal Reserve have boosted bond yields, with the 10-year Treasury bond more than doubling in 2022.
Jay Hatfield, chief investment officer of Infrastructure Capital Management and manager of the InfraCap Equity Income ETF, said: “The dramatic reversal of Fed liquidity … will collapse the pandemic era bubble in cryptocurrencies, money-losing tech companies, and meme stocks.”
Stocks of crypto miners have also plunged — shares of HIVE Blockchain Technologies Ltd (CVE:HIVE), Marathon Digital Holdings Inc (NASDAQ:MARA), and Riot Blockchain (NASDAQ:RIOT) have all dived by 50% and 60% this year.
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