In Asia trade Monday, bitcoin fell to its lowest level in over 18 months, as the fallout from Friday’s surprise US inflation statistics continued to resonate through global risk assets.
The world’s most valuable digital asset fell as much as 8.9% to $24,903.49, its lowest level since December 2020. As a general sell-off proceeded, other cryptocurrencies fell as well.
The MVIS CryptoCompare Digital Assets 100 Index, which tracks 100 of the most popular digital assets, fell as much as 9.7%.
Bitcoin’s fall can be attributed to Inflation
Traders are increasing their bets at a faster pace of Federal Reserve tightening after statistics released on Friday revealed that US inflation hit a new 40-year high in May.
“Cryptos remain at the mercy of the Fed and stuck in a merry dance with the Nasdaq and other risk assets.” “We’re hearing Bitcoin forecasts in the mid-teen and single-digit thousands which tells you the type of macro environment crypto is facing for the first time — and the levels of fear.”
Antoni Trenchev, co-founder and managing partner of Nexo
Cryptocurrencies, which have struggled in recent months as a result of the Fed’s policy, have been particularly badly struck. The Terra/Luna ecosystem’s collapse last month, as well as lender Celsius’s decision to halt withdrawals on Monday AM Asia time, have further weakened faith in the area.
Short-term investors are also fleeing as a result of the present bear market’s enormous sell-off. Short-term traders are unable to maintain their position in the market and must depart swiftly. Long-term investors take advantage of this opportunity to build up their holdings throughout this period.
The current bear market also demonstrates that long-term investors are suffering the largest unrealized losses.