The value of bitcoin plummeted to lower than $43,000 today. This is the lowest it has touched in the last one month. The cryptocurrency had earlier peaked for record price at $69,000 in November 2021.
Even the prices of other cryptocurrencies swayed as well. Ether, the second-largest by market value, reached its own lowest since October 13. Binance coin fell on October levels as well.
The fluctuations in US stock prices and the minutes released by US Federal Reserve are considered the reason for this decline.
Cause No#1: Inflation
Some experts believe that the recent downswings of the crypto market are due to the volatility in financial markets. In addition, there is a spike in inflation. So, central banks react by tightening up the monetary policy. This resulted in the reduction of liquidity in the market.
Cause No#2: US Federal Minutes
The minutes released by US Federal Reserve has also spurred investors’ negative confidence that led to bitcoin prices to fall. US Federal Reserve hinted towards the chance of early and faster interest rates hikes.
Moreover, the fall in stock prices affects the other entities as well. There has been a slide in stock markets as well. Prices of stocks like S&P and Nasdaq 100 have also shown downward trends.
“Knee-jerk reactions in crypto tend to treat them as exclusively risk assets in spite of the longer-term trends around inflation, store of value et cetera.”Stephane Ouellette, chief executive and the co-founder of crypto platform FRNT Financial Inc.
Further, other sectors witnessed the ripple effects of this mishap as well. Bitcoin mining stocks also dwindled. Analysts now need to reconsider the outlooks after the success of last year.