The price of Bitcoin and other cryptocurrencies have continued to plummet, with the flagship cryptocurrency dipping below $30,000 for the first time since July 2021.
Bitcoin fell by more than 11% in 24 hours, dipping to $29,944. Although the digital asset has since recovered slightly to $31,390, the latest deep is more than 50% lower than its all-time high of $69,000 from last November.
Other cryptocurrencies were not immune to the negative market action as the top-10 altcoin also recorded double-digit drops - Cardano (20%), Solana(16%), XRP (13%), BNB (16%), and Ethereum(10%).
In general, the crypto market dropped by 13% within 24 hours, with the total market cap dropping to $1.37 trillion. This has caused the market to slip into extreme fear.
The crypto market's fear and greed index is currently sitting at 10, down from 11 in the past 24 hours and 27 from last week.
Surprisingly, a stablecoin was also affected by the declining prices. Terra USD, in particular, lost its 1:1 peg to the U.S dollar after plunging to a low of $0.6841. The stablecoin has since rebounded to $0.9 as of press time.
As more institutional investors jumped on the crypto train over the past year, Bitcoin’s correlation with stock prices has continued to increase. That being said, Wall Street is also having a bad day as tech stocks also recorded significant drops. The Nasdaq index dropped by 4.2%.
The nervousness may not be unconnected with the Federal Reserve’s move to suppress inflation, which is at its highest since the early 1980s. The Fed announced an interest rate increase of 50 basis points last week. And rather than buy bonds to try to stimulate the economy, the Fed will be selling them to mitigate inflation.
To compound Bitcoin’s woes, Luna Foundation Guard opted to empty its $750 million Bitcoin reserves to boost Terra's LUNA stablecoin.