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• Broader crypto market lost around $1.60 trillion after peaking at nearly $3 trillion in mid-November
• Analysts are expecting a more hawkish step by Fed could further batter the crypto market
The cryptocurrency market slid again on Monday after wiping off $350 billion over the weekend, as major tokens continued their multi-day sell-off agitated by the aggressive Federal Reserve’s monetary policy.
While Bitcoin was down over 4.2% at $33,717.80, more than 50% down from its November record high of $68,790, Ether plunged about 9% to $2,211.14. The top two cryptocurrencies in terms of market cap have hit their lowest since July 2021.
Over the weekend, the global crypto market shed around $350 billion in value, bringing its decline over the last seven days to $400 billion.
The bear digital coin market lost around $1.60 trillion, after peaking at close to $3 trillion in mid-November, according to CoinMarketCap.
Worries around Fed’s meeting
The cryptocurrency market suffered massive declines last week, following the equity markets lower.
The fall worsened by the worries about the prospect of a series of interest rate hikes in 2022 by the US Federal Reserve, which the central bank hinted about in the last meeting to tighten monetary policy at a quicker rate than predicted to combat against inflation.
Investors are bracing for the upcoming Fed’s policy meeting on Wednesday. It is not clear yet if the central bank will get even more aggressive than the four rate hikes to tackle the red-hot levels of inflation.
Higher interest rates tend to weigh on speculative assets as investors flock to safer and predictive investments.
Weighed down by inflation
Concerns around rising inflation levels, which reached 7% in December, the highest since 1982, have also sent shivers through the markets, with the S&P 500 down over 10% since January last year and the blue-chip Dow Jones slipped nearly 8% year to date.
The tech-heavy Nasdaq dropped over 15.5% YTD and is entering correction territory.
Although Bitcoin advocates often suggest the digital coin is a hedge against inflation, the theory has not held up so far, and market analysts are expecting that a more hawkish Fed could further batter the crypto market.
Investors are also evaluating the impact of strict regulation on the global crypto market, as Russia’s central bank proposed banning the use and mining of cryptocurrencies last week.
Picture Credit: CoinQuora