Bitcoin continues to trade in a tight range between $18,000 and $24,000, leaving investors nervous about where the price will head next. The cryptocurrency market has been plagued by many problems, from project collapses to bankruptcies.
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The total cryptocurrency market value has also fallen below $1 trillion as digital coins have gone on sale across the board.
According to CoinDesk, Bitcoin is trading at around $18,812.36 as of 3:50 a.m. ET, down more than 5%. etherhas far outpaced Bitcoin’s gains in recent months, dropping 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 implemented a series of rate hikes totaling 2.25 percentage points.the market expects Interest rates rise further.
Bitcoin trades relative to stocks, so when stocks generally fall, so do cryptocurrencies.
“The macro environment is also proving to remain challenging as the dollar continues to rise high. This will affect all risk assets as we can see,” he said. Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“If the dollar starts to fall again, we should be able to push risky assets like Bitcoin higher again.”
The cryptocurrency market has taken a hit this year, with nearly $2 trillion worth lost since its peak in November. Bitcoin has fallen about 60% from its all-time high of $68,990.90 in November.
The sale was driven by a challenging environment for risk assets and crypto-specific issues including: Collapsed projects and bankruptcies spread across the industry.
Bitcoin has been trading in a tight range between $18,000 and $24,000 since June. In forming a bottom, Ayyar of Luno said, “Bitcoin usually likes to test previous lows to see if it holds as support.”
He said the market is likely to consolidate within the $18,000 to $24,000 range unless Bitcoin falls below $17,500.
Meanwhile, Ether and so-called altcoins, or alternative coins, have managed to rise even higher than Bitcoin. Ether has outperformed Bitcoin since both cryptocurrencies hit June lows.
Ether is the native cryptocurrency on the Ethereum network. Ethereum Plans Major Upgrade This Month, Called Merge — Proponents say it makes the network more efficient.
“In anticipation of the merger, Ethereum hit a yearly high against the Bitcoin pair,” said Ayyar. “So there was a lot more interest and activity in the Altcoin space while Bitcoin was being consolidated.”