Crypto Prices Continue To Drop, Creating Buying OpportunityJanuary 21, 2022 7:54 am
Bitcoin and other cryptocurrency prices have plummeted, wiping about $200 billion off the combined crypto market in only 24 hours, including key currencies such as Ethereum, Binance’s BNB, Solana, Cardano, and XRP.
The price of bitcoin has dropped 10% in the previous 24 hours, falling below $40,000 to roughly $38,000, a level not seen since the summer of 2021. In the meantime, the prices of Ethereum, BNB, Solana, Cardano, and XRP have all fallen between 7% and 11%.
It's becoming a more common occurrence: When stocks fall, so does bitcoin https://t.co/kxI4mpGmJO
— The Wall Street Journal (@WSJ) January 21, 2022
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As investors adjust to the reality of a more hawkish Federal Reserve and rising interest rates, stock markets throughout the world are plunging, with the tech-heavy Nasdaq 100 NDAQ -0.6 percent slipping into the correction zone.
Ethereum, the second-largest cryptocurrency behind Bitcoin, has fallen below the closely-watched $3,000 per ether mark, as Ethereum’s main competitors BNB, Solana, and Cardano have all plunged drastically after making huge increases over the last year.
After hitting an all-time high of $3 trillion in November, the crypto price drop has wiped out about $1.2 trillion from the total crypto market. The price of Bitcoin has dropped over 50% from its peak of about $70,000 per bitcoin.
Investors’ nerves have been ruffled in recent months by the possibility that the Fed’s and other central banks’ extraordinary pandemic-era stimulus will be phased down shortly. The news that Fed policymakers had explored the prospect of decreasing the bank’s balance sheet amid projected interest rate hikes startled markets earlier this month.
Soaring inflation, which has already seen prices accelerate at a rate not seen in decades, is forcing the Fed to move sooner and more forcefully than the market had anticipated.
According to a report from digital asset manager CoinShares, cryptocurrency funds saw outflows for the fifth week in a row last week as values fell. It discovered that total outflows for the whole crypto market during this period totaled $532 million, the largest outflows since 2018.
“I believe the main reason for this is the market being spooked by the Federal Reserve raising rates this year, but once the stock market sees some relief, I expect a strong squeeze to the upside for bitcoin and the entire market,” Marcus Sotiriou, an analyst at GlobalBlock, a U.K.-based digital asset broker, wrote in a note ahead of the latest crypto price crash.
The Federal Reserve released its much-anticipated report on a potential digital dollar, a so-called central bank digital currency (CBDC) inspired by bitcoin and cryptocurrencies that governments and central banks around the world have been experimenting within recent years and that some believe could upend the global financial system, earlier on Thursday.
The seven-member board of governors of the Federal Reserve found that a digital dollar might “fundamentally transform” the banking system and its relationship with the Fed, with a digital dollar being able to serve as a “near-perfect” substitute for commercial bank money.
Meanwhile, the abrupt crypto price drop comes as allegations surface that Russia is planning to follow China in banning bitcoin and cryptocurrency, claiming that crypto-assets pose a threat to the country’s financial stability, residents’ well-being, and monetary policy sovereignty.
Last year, China issued a blanket crypto ban, expelling anyone who used high-powered computers to safeguard blockchains in exchange for new currency, sending bitcoin and crypto prices soaring.
Despite the doom and gloom, global legislation always scares markets, and the long-term bets always show that times like this as a great time to buy. While the stock markets are falling mostly on uncertainty indicates, with crypto, it seems to be different, trading volume is down, signaling that whales are still holding rather than dumping and rebuying.
In addition, companies like Robinhood and Google are announcing further embracing of crypto. Robinhood recently launched its wallet, and Google signaled they may soon allow users to store and use crypto on their accounts.
— Bitcoin Magazine (@BitcoinMagazine) January 19, 2022
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