At the opening of the trading session on Monday, the value of bitcoin fell by 10.8% to $24,650. A day earlier, bitcoin fell by 6.17% and fell to the level of $ 26,600. At the time of writing, the first cryptocurrency is trading at $24,263.
The loud drop in the BTC on Monday was the highest since December 2020. Since the beginning of this month, the main virtual asset has already lost more than 20% of its value.
Bitcoin price decreased by 15.59% in May. Over the past two months, the price of bitcoin has collapsed 1.6 times - to $29,000 from $45,800. At the same time, over the past spring, it has plunged by 27%.
The key reason for the sharp collapse of the first cryptocurrency on Monday, analysts call a decrease in investor appetite for risky assets against the background of inflation data released on Friday in the United States.
Thus, according to the US Federal Bureau of Labor Statistics, in May the inflation rate in the country rose to 8.6% in annual terms, which was the worst indicator for the past 40 years, since the winter of 1981. At the same time, the so-called "core inflation" (an indicator of inflation excluding the cost of food and energy) increased by 6% last month. By the way, earlier market analysts predicted that the annual inflation rate would remain at the April level.
Against the background of data on the record level of inflation in the United States, participants in the crypto market are afraid of further aggressive steps and a tougher monetary policy of the Federal Reserve, because decisive actions of the central bank can provoke a recession.
An additional downward factor for the virtual asset market was also the permanent decline in key US stock indices, in particular the NASDAQ Composite stock index. So, at the auction on Friday, the NASDAQ indicator of high-tech companies topped the list of declines among the leading stock exchanges in America, falling by 3.52% to 11340.02 points.
As proof of the high correlation between the value of cryptocurrencies and stocks, the April trading results of the flagships of both markets can also be cited. This month, the high-tech NASDAQ Composite indicator lost more than 12%, which was the highest level of decline since 2008.
At the same time, in April, the value of bitcoin sank by 16.2% – the lowest indicator of this month since 2011.Earlier, experts of the investment company Arkane Research have already stated that the correlation of VS and technology securities has reached a high since July 2020.
Such close parallels of bitcoin with the NASDAQ index make investors increasingly doubt the ability of cryptocurrencies to become a means of protection against inflation and worry that in the near future, the BTC may become a traditionally risky asset instead of an alternative one.
Altcoin Market
The spectacular negative dynamics of the king of the cryptocurrency market was also adopted by the leading altcoins. On Sunday, the price of Ethereum dropped by 7.8% to $1,460, and on Monday, bitcoin's main competitor collapsed by 12% to $1,300 – the lowest since February 2021. Altcoin continued to adhere to the negative trend and has fallen to the level of $1,260. Experts predict that, in the event of a further permanent decline of Ethereum to $1,200 (200-week moving average), the future of the remaining altcoins will become even sadder.
The capitalization of Ethereum was about $ 176.8 billion.
As for cryptocurrencies from the top ten by capitalization, they all rushed into the red zone after the flagship of the market. At the same time, the highest drop over the past 24 hours was recorded in Avalanche (-15%), Solana (-14%), Dogecoin (-11.4%) and Shiba Inu (-10%).
According to the world's largest aggregator of data on virtual assets CoinGecko, over the past day, the total capitalization of the crypto market has fallen by almost 6% to $ 1.1 trillion.
On Monday, the BTC dominance indicator is 45.3%, and Ethereum is 15.1%. Over the past 24 hours, the index of fear and greed of the crypto industry has grown to 11 points. At the same time, the MVIS CryptoCompare Digital Assets 100 indicator, which measures 100 key tokens, collapsed by 9.7%.
Forecasts of Crypto Experts
According to preliminary scenarios of analysts, the decline in the virtual asset market will continue at least until the end of this week. At the same time, many experts draw parallels today with the loud fall of digital currencies in the past, when, with a similar state of the market, the BTC lost about 80% of its value, and alternative cryptocurrencies – about 90%.
According to the American magazine Forbes, at the moment about 30% of the richest people on the planet invest in virtual assets. At the same time, 20% of 65 dollar billionaires surveyed hold at least 1% of their fortune in cryptocurrency, and 80% of billionaires from among those who invested in digital currencies spent at least 10% of their fortune on it.