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Crypto crash: Bitcoin falls below $24k and ether tumbles

Crypto Crash: Bitcoin Drops to 18 Month Low and Ether Falls as Claims of Digital Assets’ Role as ‘Inflation Hedge’ Come under Pressure

  • Bitcoin fell about 12% in midday trading on Monday
  • Other cryptos also fell in response to inflation surge

Cryptocurrencies fell further in the red today as bitcoin crashed below $24,000 to its lowest level since December 2020.

Bitcoin is down about 12.3 percent in the past 24 hours, pushing losses to nearly 50 percent by 2022, and ethereum is down 16 percent to $1,216, with total crypto market losses of about 14 percent, according to figures from Coinbase.

It comes amid a wider sell-off of riskier assets, with the FTSE 100 and FTSE 250 each falling about 2 percent, and news that crypto lending platform Celsius Network has shut down is pulling back amid volatility concerns.

Crypto Crash: The Price Drop Comes Amid Wider Selling Of Risky Assets

Crypto Crash: The Price Drop Comes Amid Wider Selling Of Risky Assets

The sell-off of riskier assets such as stocks and cryptocurrencies is in response to rising inflation, with the US CPI last week exceeding expectations at 8.6 percent over 12 months, alongside concerns about a slowdown in global growth.

Susannah Streeter, investment and market analyst at Hargreaves Lansdown, said: “As inflation proves to be an even tougher opponent than expected, bitcoin and ether continue to take a serious bruise in the ring.”

She adds: “They are the main victims of the flight away from risky assets as investors worry about rising consumer prices around the world.

“The concern is that inflation will become too high to deal with by central banks who will have to flood the economies with torrents of icy water, in the form of much stronger interest rate hikes, to keep them under control.

“As the era of cheap money is rapidly coming to an end, traders are becoming much more risk averse and turning their backs on crypto assets.”

Meanwhile, safer assets have risen, with the US dollar appreciating 0.5 percent and 0.3 percent against the British pound and the euro respectively.

Bitcoin’s latest decline casts doubt on crypto industry’s claims that the world’s largest digital currency is an effective hedge against inflation

Charlie Morris, founder of data platform ByteTree for digital assets, said: “What gold and bitcoin have in common is that they are both hard assets, and that has an appeal during times of the market cycle.

“I don’t see them as currencies – they’re alternative assets, both of which behave like commodities.

Gold tends to see a premium building during risk-out conditions, and bitcoin during risk-on.

The price of bitcoin peaked in November 2021, reaching nearly $68,000 per coin. Ethereum also peaked at nearly $3,500 per coin in the same month.

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