Cryptocurrency market drops below $1 trillion as bitcoin nears 2022 lowest price.
What happened now? Bitcoin is crashing again. The most popular cryptocurrency in the world today fell to $18,620, its second lowest price this year; In June, the coin was briefly worth $17,600. BTC was not the only digital asset to be hit as coin prices, including Ether, also plummeted, sending the global crypto market below the $1 trillion mark.
Bitcoin has fallen over 6% this week. Ethereum, the second largest cryptocurrency by market capitalization, fell from $1,678 on Tuesday to $1,493 a few hours ago. It looks like the crypto winter that followed the TerraUSD crash in May is not going to end.
The cryptocurrency market fell below $1 trillion after the TerraUSD incident. A small revival followed, but it is again below the milestone. This is a far cry from November 2021 when Bitcoin peaked at $69,000 and the global crypto market peaked at $2.9 trillion.
Although the problems with cryptocurrencies are due to several factors, the biggest effect is the rise in interest rates. The US Federal Reserve repeatedly raised interest rates by a total of 2.25%, pushing inflation to its highest level in more than 40 years. Chairman Jerome Powell warned that the central bank would continue to raise them, which would cause “some pain” to the US economy.
CNBC writes that the tightening of the Fed’s policy strengthened the dollar, which put pressure on risky assets. Yields on 10-year US Treasuries also rose.
Crypto owners have some hope: a merger, Ethereum’s long-planned and often-delayed transition from its current proof-of-work model to proof-of-stake. The Ethereum Foundation says this will happen sometime in the middle of this month. Not only could this further drive down graphics card prices, but it could also attract more ETH buyers and kick-start the overall digital asset market.
Cryptocurrency winter has devastated holders and businesses. The largest bitcoin mining companies lost more than $1 billion last quarter, forcing them to sell mining rigs to stay afloat; Celsius went bankrupt; and OpenSea, the world’s largest NFT marketplace, has cut 20% of its jobs.
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