Bitcoin continues to trade in the range of $18,000 to $24,000, leaving investors uncertain about the next price. The crytpo market has been plagued by a number of problems from project collapse to bankruptcy.
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The value of the entire cryptocurrency market also fell below $1 trillion as digital coins in the space sold off.
Bitcoin was trading around $18,812.36 at 03:50 a.m. ET, down more than 5%, according to CoinDesk. Etherwhich has outpaced bitcoin’s gains in the last month, down more than 8% at $1,518.59.
Central banks around the world are fighting rampant inflation by tightening monetary policy. The US Federal Reserve has carried out a series of interest rate hikes totaling 2.25 percentage points. The market expects it interest rates rise further.
Bitcoin has traded in correlation to stocks and if they fall, in general, so does cryptocurrency.
“The macro environment also continues to prove difficult with the dollar continuing to be put at a high level. This affects all risk assets as you can see,” Vijay Ayyar, vice president of corporate and international development at the crypto exchange Luno, told CNBC.
“If we see the dollar start to pull back, then we should be able to get risk assets like bitcoin to pull back.”
The crypto market has been battered this year with nearly $2 trillion wiped off its value since its peak in November. Bitcoin is about 60% off the record high of $68,990.90 it hit in November.
The sell-off was caused by a difficult environment for risk assets as well as crypto-specific issues included project collapses and bankruptcies that have spread throughout the industry.
Bitcoin has been trading in a tight range between $18,000 to $24,000 since June. Luno’s Ayyar said that in forming a bottom, “bitcoin usually likes to go back and test the previous bottom to see if they continue as support.”
He said that if bitcoin does not fall below $17,500, then the market will consolidate in the range of $18,000 to $24,000.
In the meantime, ether and so-called altcoins, or alternative coins, have managed to rise above bitcoin. Ether has outperformed bitcoin since both cryptocurrencies hit lows in June.
Ether is the native digital currency on the Ethereum network. Ethereum is planning a big upgrade this month – known as a merge – which supporters say will make the network more efficient.
“Ethereum reached an annual high against its bitcoin counterpart in anticipation of the merger,” Ayyar said. “That’s why there is more interest and activity in the Altcoin space, while Bitcoin is consolidating.”