Bitcoin, the world’s largest cryptocurrency, has dipped by 15 per cent this week and is trading below $33,000 (£26,800).
The global crypto market has slumped 30 per cent this year to date falling 4.5 per cent today as the world’s top cryptocurrencies sunk lower. Over the past 24 hours Ethereum is down by 5.5 per cent, Bitcoin has tumbled 4.9 per cent and Cardano has shed 10.3 per cent of its value.
Analysts blamed the price dip on investors dumping Bitcoin amid a tough macro economic environment. The US’ Federal Reserve this week increased interest rates by 50 basis points – the biggest hike since 2000 – prompting a pull back in US and European markets.
“The background to this is macro external factors – we have a super strong dollar and the timing of the fed announcement did not help,” commented the chief investment officer of Bytetree Charlie Morris.
“Investors are dumping bitcoin so the price is going down, but the underlying network is very strong,” commented Morris. He added that Bitcoin was “overvalued” late last year when it touched highs of $69,000, but is now trading at a fair value.
“Investors are clearly concerned about the aggressive monetary policy from the Federal Reserve, as they will also begin Quantitative Tightening in June,” commented Marcus Soteriou, a broker for Globalblock.
“In addition to macro headwinds, there is fear in the crypto space too with UST – the biggest decentralised stablecoin,” he added.
Terra’s algorithmic stablecoin UST which is supposed to be linked to the price of the dollar lost its peg on Saturday after an alleged attack on the project. UST has regained is peg and is trading at $0.989 after its founders committed to loaning $1.5bn to protect its value.