By Medha Singh
(Reuters) – Crypto assets lost nearly $800 billion in market value over the past month, hitting a low of $1.4 trillion on Tuesday, according to data site CoinMarketCap, as the end of loose monetary policy reduces the appetite for risky assets.
Bitcoin, which accounts for almost 40% of the cryptocurrency market, hit a 10-month low on Tuesday, before rallying to as high as $31,450, just six days after hitting $40,000. It was trading down more than 54% from its Nov. 10 all-time high of $69,000.
Digital asset prices have tumbled, mirroring the slump in equities on fears of aggressive interest rate hikes around the world to stave off inflation at multi-decade highs. The tech-heavy Nasdaq was down 28% from its all-time high in November 2021.
The total value of the cryptocurrency market was $2.2 trillion on April 2, a far cry from its all-time high of $2.9 trillion in early November, according to CoinMarketCap.
«Bitcoin remains highly correlated to broader economic conditions, suggesting the road ahead could unfortunately be rocky, at least for now,» blockchain data provider Glassnode said in a note.
Signs of weakness in stablecoins, which are typically safer, further spooked investors. TerraUSD, the world’s fourth largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.
Despite Bitcoin’s falling price, funds and products linked to it saw inflows of $45 million last week as investors took advantage of price weakness, according to digital asset manager Coinshares in a report published on Tuesday. monday.
«A huge amount of liquidity has inflated some of these cryptocurrencies,» said Sebastien Galy, senior macro strategist at Nordea Asset Management. Galy expects cryptocurrencies, also correlated to high-growth stocks, to come under pressure as various central banks tighten monetary policy.
(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing in Spanish by Ricardo Figueroa)