Bitcoin Plunges Below $40,000 For First Time Since August As Cryptos Follow Wall Street Tech Rout | Currency News | Financial and business news
- Bitcoin fell below $40,000 for the first time since August as a broad crypto selloff intensified.
- Investors have dumped both cryptocurrencies and tech stocks as they prepare for the Fed to raise interest rates in 2022.
- Ethereum fell below $3,000 as binance coin, cardano and solana all plunged into the red on Friday.
Bitcoin slipped below $40,000 and Ethereum fell below $3,000 as a broad selloff intensified on Friday, with investors dumping cryptocurrencies as well as tech stocks as they prepare to what the Federal Reserve raises interest rates.
Bitcoin was down 6.6% at $39,140.16 on the Coinbase exchange as of 3:45 a.m. ET. The largest and oldest cryptocurrency has fallen nearly 20% in the past month to sit well below November’s all-time high of nearly $69,000.
Meanwhile, Ethereum was down 7.8% at $2,894.41. It has fallen nearly 30% in the past month, after hitting a record close to $5,000 in November.
Investors have been quick to sell off both cryptocurrencies and speculative tech stocks in anticipation of the Fed withdrawing its support for markets and the economy in 2022. Traders believe the central bank will raise rates four times this year, an expectation that quickly drove bond yields higher.
Higher bond yields have in turn made unprofitable crypto and tech companies unattractive, given that neither offer clean returns. Instead, investors have turned to so-called value stocks in sectors such as energy and financials that are more closely tied to the health of the economy.
“Pessimism continues to grow among investors and traders regarding riskier assets and this primarily influences the price of stocks and bitcoin,” said Naeem Aslam, chief market analyst at AvaTrade.
“From a price technical standpoint, bitcoin price has breached the key $40,000 support level, which has been tested a few times before. Now all eyes are on the next two important price levels. : $35,000 and the most important is $30,000.”
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Even bitcoin bulls have become concerned about the impact of Fed policy and bond yields on the crypto market.
Galaxy Digital founder and crypto billionaire Mike Novogratz said this week, “As long as rates go up, we will see pressure on Nasdaq and crypto.” SkyBridge Capital boss Anthony Scaramucci said his investment firm was not buying the drop this time around, despite recommending it in the past.
Another factor weighing on prices was Thursday’s proposal by Russia’s central bank to ban cryptocurrency mining and trading, analysts said.
The vast cryptocurrency complex was a sea of red on Friday, according to prices on Coinmarketcap. Binance coin, the third largest token, fell almost 10%; cardano was about 9% lower; and solana had fallen about 8%.
However, Aslam said investors are likely to buy weakness at some point, with many investors seeing digital assets as the currencies of the future.
“Smart money and other institutions are sure to benefit from the current price action, and they’re likely to do some good business.”