On the morning of September 7, Bitcoin was worth less than $19,000, hitting its lowest level since June following a fall in stock markets around the world and a sustained strengthening of the US dollar. The value of the entire cryptocurrency market also fell below $1 trillion due to the digital coin sell-off, reports CNBC.
Bitcoin was trading at around $18,812.36 today, down more than 5%, according to CoinDesk. Ethereum, which has far outpaced Bitcoin’s gains in recent months, fell more than 8% to $1,518.59. Central banks around the world are fighting rampant inflation with a tightening of monetary policy. The Federal Reserve System of the United States made a number of interest rate increases by 2.25 percentage points. Markets expect a further rise in interest rates.
Policy tightening by the Fed has strengthened the U.S. dollar which has weighed on risk assets. The 10-year U.S. Treasury yield has also surged. Bitcoin has traded in correlation to stocks and so if they fall, in general, so does the cryptocurrency.
“The macro environment also continues to prove difficult with the dollar continuing to put in highs. This impacts all risk assets as we can sees,” said Vijay Ayyar, vice president of corporate development and international development at crypto exchange Luno. “If we see the dollar start to move back down, then we should be able to get risk assets such as bitcoin move back up again.”
The cryptocurrency market has taken a hit this year, with its value falling by nearly $2 trillion since peaking in November. Bitcoin is down about 60% below its all-time high of $68,990.90. The sell-off has fueled a challenging environment for risky assets and issues surrounding cryptocurrencies, including collapsed projects and bankruptcies that have spread across the industry.
Bitcoin has traded between $18,000 and $24,000 since June. Luno’s Ayyar said that when forming a bottom, “Bitcoin typically likes to go back and test previous lows to see if they hold as support.” He said that if Bitcoin does not fall below $17,500, the market is likely to consolidate in the $18,000 to $24,000 range.