Sell-off accelerates in the cryptocurrency market – Bitcoin has reached a 5-month low and is trading below the level of $40,000. At the same time, Ethereum has fallen to a four-month low and is trading below the level of $3,000.
Analysts see investors dumping cryptocurrencies along with tech stocks as they exit risky assets ahead of the Fed's rate hike.
Bitcoin plunged by 44.4% from its all-time high in November and has fallen by more than 20% since the beginning of the year.
Ethereum, the world's second-largest cryptocurrency, has also declined 42.8% below its all-time high. Since the beginning of the year, it has fallen by almost 30%.
The disappointing start to the year was marked by the hawkish shift in the Fed's rhetoric, with markets anticipating a fourfold rate hike.
In response, U.S. Treasury yields have risen, triggering a broader sell-off of stocks and cryptocurrencies.
According to the CEO of Galaxy Digital and cryptocurrency billionaire Mike Novogratz, it will be difficult for the cryptocurrency to increase until the shares strengthen.
Novogratz highlighted the sharp drop in the Russell Index, which has declined by more than 10% since the start of the year. According to him, it's a bear market right now. Thus, he recommended selling on the rise, and not buying on the falls.
Some economists believe that Bitcoin will still reach the level of $30,000. Last week, Invesco warned that the world's first cryptocurrency could decline below $30,000 this year, citing similarities between today's crypto marketing campaigns and stockbroker activity leading up to the Great Depression.
Peter Schiff, Euro Pacific Capital's Chief Economist, said he did not rule out a price move below $10,000. Bitcoin has broken the "neckline" of the head and shoulders pattern. The scariest thing for long positions is that the pattern predicts a move below $30,000.
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