Hong Kong, May 9 (BUS): Bitcoin slumped to its lowest level since January on Monday as a slump in stock markets continued to hurt cryptocurrencies, which are currently trading in line with riskier assets such as tech stocks.
Bitcoin dropped as low as $33,266 in the morning trade, to test the January low of $32,951. Reuters reported that any drop below this level would be the lowest since July last year.
Trading then settled at $33,500, down 1.4%.
“I think everything inside crypto is still classified as a risky asset, and similar to what we saw on the Nasdaq, most cryptocurrencies are crashing,” said Matt Deeb, COO of crypto platform Stack Funds in Singapore.
The tech-heavy Nasdaq fell 1.5% last week, losing 22% year to date, weighed by the prospect of persistent inflation forcing the US Federal Reserve to raise interest rates despite slowing growth. Nasdaq futures fell 0.8% in Asian trading Monday morning. MKTS-GLOB
Depp said other factors that triggered the pullback over the weekend — bitcoin closed at around $36,000 on Friday — were low liquidity in the cryptocurrency market over the weekend, and short-term fears that the algorithmic stablecoin Terra USD (UST) could lose. Pegging its currency to the dollar. .
Stablecoins are digital tokens that are tied to other traditional assets, often US dollars.
The crypto community is closely watching UST because of the new way it maintains its 1:1 peg to the dollar, and because its founders have plans to build $10 billion worth of bitcoin to back the stablecoin, which means volatility. In the UST it could extend to the bitcoin markets.
Ether, the world’s second largest cryptocurrency that supports the Ethereum network, fell to $2,421 on Monday, its lowest level since late February.
MI