Bitcoin rebounds slightly after briefly dipping below $30,000

Bitcoin fell to its lowest level since January on Monday as slumping equity markets continued to hurt cryptocurrencies, which are currently trading in line with so-called riskier assets like tech stocks.

Bitcoin briefly dropped below the $30,000 (€28,400) level late on Monday, surpassing the January low of $32,951 (€31,361.77). The last time Bitcoin traded below that level was in July 2021.

By Tuesday, it recovered but only slightly to $31,491 (€29,877), according to CoinMarketCap. 

The price drop comes amid a broader, multi-day sell-off on Wall Street as anxiety builds around inflation and if the Federal Reserve can bring prices down without sparking a recession.

The sell-off has hit the crypto and equity markets as investors shift from riskier markets.

“I think everything within crypto is still classed as a risk asset, and similar to what we’ve seen with the Nasdaq, most cryptocurrencies are getting pummelled,” said Matt Dibb, COO of Singapore-based crypto platform Stack Funds.

The tech-heavy Nasdaq fell 1.5 per cent last week and has lost 22 per cent year to date, hurt by the prospect of persistent inflation forcing the US Federal Reserve to hike rates despite slowing growth. 

Nasdaq futures were down a further 0.8 per cent in Asia trade on Monday morning.

Ether losses

Dibb said other factors in the decline over the weekend – Bitcoin closed on Friday around $36,000 (€34,253) – were the crypto market’s notoriously low liquidity over the weekends, and also short-lived fears that algorithmic stablecoin called Terra USD (UST) could lose its peg to the dollar.

Stablecoins are digital tokens pegged to other traditional assets, often the US dollar.

UST is closely watched by the crypto community both because of the novel way in which it maintains its 1:1 dollar peg, and because its founders have set out plans to build a reserve of $10 billion (€9.5 billion) worth of bitcoin to back the stablecoin, meaning volatility in UST could potentially spill over into bitcoin markets.

Ether, the world’s second-largest cryptocurrency, which underpins the ethereum network, fell as low as $2,421 (€2,303.56) on Monday, its lowest since late February.