Yahoo Finance Bitcoin and ethereum slide as crypto slump continues
Cryptocurrency prices continued their recent fall on Monday as traders turned to safer assets and away from riskier investments.
Bitcoin (BTC-USD) was 0.6% lower on the day at $41,597 (£30,609), its lowest level since September, with no sign of a rebound as of yet.
The second-largest crypto token ethereum (ETH-USD) also followed suit, slumping 0.6% to $3,108 after dipping below the $3,000 level on Saturday before later recovering.
Fear hit 10 on the Crypto Fear and Greed Index on the weekend, which is the lowest since the crypto market bottomed on 21 July before a rally of over 100%, pointing to a possible relief rally in the short term.
As well as the steer from riskier investments, prices collapsed in the last week as the US federal Reserve indicated an expedited willingness to hike interest rates and sell debt assets to combat rising inflation.
“The minutes from the Fed have increased expectations that the central bank of the world’s largest economy will now move faster to raise interest rates to fight soaring inflation,” said Nigel Green, chief executive and founder of deVere Group, after the announcement.
“As a result, there’s been a knee-jerk sell-off on Wall Street and the crypto market as it is perceived by some traders that such a move puts at risk the liquidity that has benefitted many asset classes, including bitcoin.”
Watch: What is Bitcoin?
Later this week, US inflation data will be released, with the market expecting the consumer price index (CPI) to rise 7.1% for the year through December, and 0.4% over the month. If the figure released is larger than expected, it may put further pressure on cryptos as the Fed looks to control it.
It comes as a US-listed blockchain company has begun offering bitcoin dividend payments. BTCS Inc said it intends to pay a $0.05 per share dividend in bitcoin to investors, with the amount it pays depending on the price of Bitcoin on the day of the ex-dividend date.
Investors will however be given a choice to take the so-called “bividend” payment in fiat currency.
Read more: European markets fall as traders watch rising COVID cases and expected rate hikes
Chief executive Charles Allen said: "We want to reward our long-time shareholders for their continued support and encourage financial freedom by providing the means to enable direct ownership of bitcoin and other digital assets.”
Its share price rocketed in trading on Thursday on the back of the news, up 44% in the session, despite wider markets falling significantly.
Commenting on the recent downtrend Mike Novogratz, chief executive of Galaxy Digital, said he expects bitcoin to bottom at around $38,000 to $40,000.
“I know big institutions who are going through their process to put positions on. They’re going to see those as attractive levels to buy,” he said.
Watch: What are the risks of investing in cryptocurrency?
