Bitcoin has recovered some of its recent losses, buoyed by the US Federal Reserve’s tough stance on inflation.
The world’s largest cryptocurrency was trading at $22,338.49 on Thursday morning in Asia, according to Coinbase, after falling to $20,079.72, its lowest level since December 2020.
Bitcoin has lost about 33% against the US dollar since Friday and has dropped more than 50% since the beginning of the year.
It has slumped about 70% from its record high of $69,000 in November.
The digital currency sector has been pummelled this week after the Celsius crypto platform froze withdrawals and transfers between accounts, stoking fears of contagion in markets shaken by the demise of the TerraUSD and Luna tokens last month.
Stocks Snap Losing Streak
Cryptocurrencies were buoyed as the S&P 500 rallied after a policy announcement by the Fed to raise interest rates, snapping a five-session losing streak.
The Fed raised its target interest rate by three-quarters of a percentage point, its biggest rise since 1994.
Crypto funds saw outflows of $102 million last week, according to digital asset manager CoinShares, citing investors’ anticipation of tighter central bank policy.
The value of the global crypto market has tumbled 70% to under $900 billion from a peak of $2.97 trillion in November, CoinMarketCap data shows.
“Some parts of the broader crypto ecosystem are facing a rather harsh reckoning,” said Mikkel Morch, executive director at digital asset hedge fund ARK36.
“As the reality of the bear market starts to settle in, the hidden leverages and structural weaknesses of projects that only worked when the prices went up are finally brought to light.”
- Reuters, with additional editing by George Russell
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