Bitcoin and major cryptocurrencies—including ethereum, BNB, luna, XRP, solana, cardano, avalanche and dogecoin—have suddenly moved sharply lower, wiping around $200 billion from the combined crypto market even as traders are braced for “big surprises” this week.
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The latest bitcoin and crypto crash—sending the market back under $2 trillion—has seen the bitcoin price drop 5% over the last 24 hours, adding to earlier losses, while ethereum and its biggest rivals BNB, solana, cardano and avalanche are leading the market lower, all down between 5% and 10%.
Ripple’s XRP and Terra’s luna are down 5% and 7% respectively, while the meme-based dogecoin, which had soared this week following Tesla billionaire and dogecoin supporter Elon Musk buying a major stake in Twitter and joining its board, has crashed 13%.
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The bitcoin and crypto crash comes after Federal Reserve meeting minutes revealed the officials agreed to begin reducing the bank’s yawning balance sheet by $95 billion a month, likely beginning in May. The plans hit stock markets, with technology shares leading a retreat and resulting in the Nasdaq 100’s worst two-day loss in nearly a month.
Earlier this week, Fed governor Lael Brainard spooked markets when she said curbing inflation was “paramount” and indicated the Fed would hike rates faster and move more quickly to reduce its balance sheet than the market had anticipated.
“The prospect of continued monetary tightening by the Federal Reserve has unnerved stock market investors that have enjoyed the benefits of accommodative policies from the US central bank over the past decade,” the trading team at bitcoin and crypto exchange Bitfinex said in an emailed note but adding they remain upbeat.
“While bitcoin and the wider cryptocurrency market has dipped today the trend of range-bound trading appears to remain in place as on-chain data shows that overall buying activity remains positive.”
Bitcoins were withdrawn from exchanges at a record pace last month, according to data from on-chain analytics company Glassnode—something that’s generally taken as a bullish signal as it suggests buyers are looking to hold the coins long term rather than sell them on.
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This week, bitcoin’s biggest supporters are gathering in Miami for the hotly-anticipated Bitcoin 2022 conference, the follow-up to last year’s show-stopping event that saw El Salvador announce it planned to adopt bitcoin as legal tender.
Meanwhile, business intelligence software company-turned bitcoin-accumulator MicroStrategy this week announced it had bought another tranche of bitcoin, spending $200 million. The company, led by bitcoin bull Michael Saylor, now owns 129,218 bitcoins, valued at around $6 billion.
“The fact that even such a large buyer failed to warm up the market makes us look to the near future with caution,” Alex Kuptsikevich, FxPro senior market analyst, wrote in emailed comments. Since the beginning of the month, the bulls have clearly not been able to develop an offensive.”