Following a cryptocurrency selloff that brought the sector's entire market worth below $1 trillion, Bitcoin is flirting with a test of this year's lows.
As of 10:28 a.m. in Singapore, the biggest digital coin had dropped more than 6% this week and was trading at around $18,620. According to CoinGecko, the crypto market capitalization has declined by a comparable amount in the last 24 hours.
Soaring real interest rates, viewed as the real cost of borrowing, are putting pressure on various risk assets, including cryptocurrency. Bitcoin's decline is bringing it closer to a bottom of around $17,600, which was reached in June in the aftermath of blowups at crypto lenders and hedge funds.
“The macro narrative is tough to be able to let go and will drive risk assets,” Kevin Loo, head of investment insights at IDEG Asset Management Ltd., said on Bloomberg Television. "Bitcoin is trading below $20,000." We've been here before, and it's possible that we could go even lower."
At the same time, there is still some hope that the upcoming upgrade to the Ethereum network will attract investment into Ether and other digital assets.
"If you measure trough to trough, the trend is that we are heading higher in the longer term," Loo said. "Bitcoin was at $3,000 in the first crypto winter."
The MVIS CryptoCompare Digital Assets 100 index of the largest tokens is down about 60% this year. Since its pandemic-era high of almost $69,000 in November of last year, bitcoin has fallen significantly. Since its pandemic-era high of almost $69,000 in November of last year, bitcoin has fallen significantly.