Bitcoin, one of the world’s largest digital assets, fell more than 12% on Friday, falling below $36,000 for the first time since July. Bitcoin has lost more than 45 percent of its value since its peak in November of last year. Other digital currencies have suffered similarly, with Ether and meme coins succumbing to the same fate.
The only constant for Bitcoin has been its recent decline. Riskier assets have suffered globally as a result of the US Federal Reserve’s plans to withdraw market stimulus.
Since its peak, Bitcoin has lost more than $600 billion in market value, and the overall crypto market has lost more than $1 trillion.
Although there have been multiple considerably larger dips for both Bitcoin and the aggregate market, the present events reflect the second-largest ever decline in terms of the dollar for both, according to Bespoke Investment Group.
Bespoke analysts commented,
It gives an idea of the scale of value destruction that percentage declines can mask … Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about both in raw dollar terms as well as in percentage terms.
The Federal Reserve’s plans have shook both the cryptocurrency and stock markets, with cryptocurrencies twisting and turning in a similar way to equities.
Stephane Ouellette, the Chief Executive and Co-Founder of institutional crypto-platform FRNT Financial, said in a statement to Bloomberg:
Crypto is reacting to the same kind of dynamics that are weighing on risk-assets globally. Unfortunately, for some of the mature projects like BTC, there is so much cross-correlation within the crypto asset class it’s almost a certainty that it falls, at least temporarily in a broader alt-coin valuation contraction.
According to Bloomberg, crypto-centric companies plummeted on Friday as well, with Coinbase Global Inc. losing roughly 16 percent and falling to its lowest level since its inception in the spring of 2021. MicroStrategy Inc. dropped 18% as well. Because of the enterprise software company’s Bitcoin resources, its stock has become a proxy for the digital currency.
On the other hand, the Biden administration is preparing to present a first government-wide strategy for digital assets early next month. According to those familiar with the situation, the administration intends to charge federal agencies with assessing the dangers and opportunities they face.