Crypto assets shed $800bn in market value in a month

Published May 10, 2022
Broken representation of the Bitcoin virtual currency, placed on a monitor that displays stock graph and binary codes, are seen in this illustration picture, — Reuters
Broken representation of the Bitcoin virtual currency, placed on a monitor that displays stock graph and binary codes, are seen in this illustration picture, — Reuters

Crypto assets bled nearly $800 billion in market value over the past month, touching a low of $1.4 trillion on Tuesday, according to data site CoinMarketCap, as the end of easy monetary policy diminishes appetite for risk assets.

Bitcoin, which makes up for nearly 40 per cent of the crypto market, hit a 10-month low earlier on Tuesday, before rebounding to $31,450, just six days after touching $40,000. It was more than 54pc below its Nov. 10 all-time high of $69,000.

Digital asset prices have slumped, mirroring a plunge in equities on fears of aggressive interest rate hikes across the globe to stave off decades-high inflation.

The tech-heavy Nasdaq was down 28pc from its November 2021 record high.

Also read: SBP governor sees 'no good use' for cryptocurrency

The total crypto market value was at $2.2tr on April 2, well off of its all-time peak of $2.9tr in early November, as per CoinMarketCap.

"Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may, unfortunately, be a rocky one, at least for the time being," blockchain data provider Glassnode said in a note.

Signs of weakness in stablecoins, typically a safer cryptocurrency, further spooked investors.

TerraUSD, the world's fourth-largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.

Despite bitcoin's price slump, funds and products linked to it posted inflows of $45m last week as investors took advantage of price weakness, according to digital asset manager Coinshares in a report released on Monday.

"Enormous amount of liquidity that has inflated some of these cryptocurrencies," said Sebastien Galy, senior macro strategist at Nordea Asset Management.

He expects crypto, also correlated to high-growth stocks, to come under pressure as several central banks tighten their monetary policy.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Trump 2.0
Updated 07 Nov, 2024

Trump 2.0

It remains to be seen how his promises to bring ‘peace’ to Middle East reconcile with his blatantly pro-Israel bias.
Fait accompli
07 Nov, 2024

Fait accompli

A SLEW of secretively conceived and hastily enacted legislation has achieved its intended result: the powers of the...
IPP contracts
07 Nov, 2024

IPP contracts

THE government expects the ongoing ‘negotiations’ with power producers aimed at revising the terms of sovereign...
Rushed legislation
Updated 06 Nov, 2024

Rushed legislation

For all its stress on "supremacy of parliament", the ruling coalition has wasted no opportunity to reiterate where its allegiances truly lie.
Jail reform policy
06 Nov, 2024

Jail reform policy

THE state is making a fresh attempt to improve conditions in Pakistan’s penitentiaries by developing a national...
BISP overhaul
06 Nov, 2024

BISP overhaul

IT has emerged that the spouses of over 28,500 Sindh government employees have been illicitly benefiting from BISP....