In November 2021, Bitcoin and Ether each reached fresh all-time highs, but things appear to have only gotten worse since then. Bitcoin and most other altcoins have been falling in value as crypto investors anticipate the US Federal Reserve raising interest rates faster and more aggressively than most had predicted only a few months ago. Indeed, according to CoinMarketCap data, Bitcoin’s current market cap of $665 billion is down from nearly $1.3 trillion in November 2021, while the overall crypto market has lost more than $1 trillion in the same time period.
There have been higher percentage declines for both Bitcoin and the aggregate market, according to reputable wealth management firm Bespoke Investment Group, but the meltdown over the weekend is the second-largest recorded decline in US dollar terms for both.
See Also: 5 Most Important Cryptocurrencies Other Than Bitcoin
The cryptocurrency sell-off comes as investors sell IT stocks in anticipation of the US Federal Reserve tightening its loose monetary policy to battle inflation. The most recent price drop comes as the Federal Reserve takes tentative steps toward introducing a US digital currency, similar to electronic cash but backed by the central bank. The Federal Reserve delivered a long-awaited report on its options on Friday.
The analysis didn’t come up with any definitive answers, instead delving into the advantages and disadvantages of many options. This is in line with the Fed’s glacial progress on digital currency concerns, despite the fact that other central banks are experimenting with their own versions.
This week, global stock markets saw their steepest drops in more than a year, with the fast-growing companies that propelled the recovery from the depths of the coronavirus epidemic taking the brunt of the losses.
The dramatic drop in digital assets coincided with the Russian central bank’s announcement of drought legislation to outlaw all cryptocurrency trade and mining. The new restrictions would also prohibit banks from investing in bitcoin and prohibit any cryptocurrency-to-traditional-currency trade in Russia.