According to data site CoinMarketCap, crypto assets have lost about $800 billion in market value in the last month, reaching a low of $1.4 trillion on Tuesday, as the end of free monetary policy dampens the desire for risk assets.
Bitcoin, which accounts for roughly 40% of the cryptocurrency market, fell to a 10-month low on Tuesday before rebounding to $31,450, only six days after hitting $40,000. It was down more than 54% from its all-time high of $69,000 on November 10th.
Prices of digital assets have fallen, reflecting a drop in equities amid fears of aggressive interest rate hikes around the world to combat decades-high inflation. The Nasdaq, a tech-heavy index, was down 28% from its all-time high in November 2021.
According to CoinMarketCap, the total crypto market worth was $2.2 trillion on April 2, down from an all-time high of $2.9 trillion in early November.
“Bitcoin remains closely tied to larger economic conditions, implying that the road ahead may, unfortunately, be bumpy, at least for the time being,” stated blockchain data firm Glassnode in a note.
Investors were also alarmed by signs of weakness in stable coins, which are normally safer cryptocurrencies. TerraUSD, the fourth-largest stable coin in the world, lost a third of its value on Tuesday after losing its dollar peg.
According to a study released on Monday by digital asset manager Coinshares, despite bitcoin’s price drop, funds and products related to it saw inflows of $45 million last week as investors took advantage of market weakness.
“An enormous amount of liquidity has inflated some of these cryptocurrencies,” said Nordea Asset Management’s senior macro strategist, Sebastien Galy. As various central banks tighten their monetary policies, he expects crypto, which is also tied to high-growth equities, will face pressure
