Bitcoin (BTC) price has fallen another 7.8% in the past 24 hours to a daily low of $18,420.
Although the dominant cryptocurrency has recovered a bit higher 19.2 thousand dollars At the time of writing, this was the second major drop in the past week, sending Bitcoin down more than 18%, or its lowest level since the end of 2020.
The drop came as Bitcoin spot long orders have been liquidated close to $400 million since early Sunday, September 18, posting remarkably high numbers two days in a row, according to data from Coinglass.
Bitcoin’s dominance has also fallen to 39.3%At its lowest level since mid-2018, panic spread quickly across the broader digital asset market.
The total value of the crypto market dropped to $903.2 billion as major currencies including Ethereum (ETH), Ripple (XRP) and Cardano (ADA) posted double-digit losses. According to the Crypto Fear and Greed Index, the market has returned to “intense fear‘, down six points in one day.
Fears of Fed Rate Rally Spur Crypto Crash
Bitcoin’s decline coincided with a broader decline in stock markets, which also fell early Monday as investors await another major interest rate hike announcement from the US Federal Reserve (Fed) on Wednesday, September 21.
markets afraid That the next rate hike could be one in the history books as the biggest in the last 40 years. financial experts Climate forecast That the US central bank could raise interest rates by 0.75 percentage points to 3% or even raise them “by an unprecedented full 1 percentage point to 3.25%” to cool 8.3% inflation.
Investors are also wary of news from the Bank of England, which is expected to announce a 0.75 percentage point rate hike on Thursday, September 22nd. In addition, other central banks around the world are on the way to increase interest rates. . Although this move aims to halt historically high levels of inflation, it thus leads to volatility in the financial markets.
Bearish feeling dominates
Contrary to popular expectations of being a safe-haven asset, Bitcoin moves in a positive correlation, or tandem, with stock market prices. This means that the dominant cryptocurrency remains highly reactive to movements in the stock market and the macroeconomic environment, such as global recession fears and monetary tightening.
When considering Bitcoin options, or investment contracts that give the right to buy or sell an asset at a specified price, sellers dominate Bitcoin options market end of september. On the other hand, September is historically a bearish month for bitcoin prices.
In addition, the crypto space is widely discussed by economists at Goldman Sachs warning Bitcoin is likely to drop to new lows of $12,000 if the US central bank aggressively raises interest rates.
The macroeconomic environment remains uncertain and could lead to higher volatility in the short term across the cryptocurrency markets.