Bitcoin prices plunge today, down nearly 60% this year; Ether breaches $1,000

Bitcoin dropped 6.53% to $19,106.37 today, losing $1,334.33 from its previous close. Earlier in the day, it sank as far as $19,047.61, its lowest point since December 2020. Ether breached the $1,000 mark briefly and dropped to $999.86, the lowest since January 2021, before paring losses.  Bitcoin is down 59% this year, while ether is down 73%. 

Central bankers signaled they will keep hiking aggressively this year in the fight to tame inflation. A higher-rate environment has been deleterious to riskier assets like cryptos.

Edul Patel, Co-Founder & CEO of Mudrex-A Global Crypto Investing Platform, says Bitcoin has been under pressure after the Federal Reserve raised interest rates by 75 basis points which is the largest in three decades, on Wednesday. The volatility in the market may continue for the next coming weeks, he added. 

The Bank of England on Thursday raised its benchmark lending rate a quarter point to 1.25%, the highest since 2009, and suggested it may step up the pace of tightening at its next meeting in August.

In a sign of deepening turmoil in the crypto market, Babel Finance became the second major digital-asset lender this week to freeze withdrawals, telling clients it is facing “unusual liquidity pressures” as it contends with recent market declines.

“The crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events,” the Asia-based lender and asset manager said in a notice on its website to explain the temporary measure.

Adding to the mood, the crypto hedge fund Three Arrows Capital suffered large losses and said it was considering asset sales or a bailout. ”

The crypto market now stands at a fraction of its heights in late 2021, when Bitcoin traded near $69,000 and traders poured cash into speculative investments of all stripes. The total market cap of cryptocurrencies is around $900 billion, down from $3 trillion in November, according to CoinGecko. 

“Sentiment in crypto markets is that the unknown unknowns are the most significant at this point in time,” said Ainsley To, Noelle Acheson and Konrad Laesser of Genesis Trading, in a note Thursday. “The resurgence of counterparty risk is a reminder that not everything that matters in risk management can be precisely quantified. Risk is what is left over after you think you’ve thought of everything.” (With Agency Inputs)