May 09, 2022 07:36AM ET
By: AnalysisWatch
Bitcoin fell to levels last seen in July 2021. It was part of a broader retreat in cryptocurrencies triggered by a global flight from riskier assets.
The world's largest digital token fell as much as 4.6% on Monday to trade at around $32,800 at 7:07 a.m. in New York.
Most major virtual coins were under pressure over the weekend, and the poor sentiment continued on Monday. Stocks in Asia and Europe also fell, with the Nikkei index down 2.5% and the Stoxx Europe 600 index down 2%. US stock futures were also down.
Tightening monetary policy to combat galloping inflation and declining liquidity are causing investors to turn away from speculative assets in global markets. The value of Terra USD, or UST, an algorithmic stable coin that seeks a one-to-one peg to the dollar, slipped below US$1 over the weekend before recovering, adding to caution about digital assets.
Monday's sell-off was widespread across the crypto currency universe, with Cardano falling 8.4% and Polkadot falling 6.7%, data compiled by Bloomberg shows.
According to Edul Patel, chief executive officer of Mudrex, an algorithm-based crypto investment platform, rising interest rates are giving retail and institutional investors pause for thought about the crypto market's prospects.
Bit coin’s 29% decline in 2022 compares with more than 10% declines in global bonds and equities and a 2.5% rise in gold.
Bitcoin’s recent decline risks taking it out of its 2022 trading range for good, completely reversing the recent bull market that drove the token to a record near $69,000 in November.
With its 40-day correlation with the S&P 500 stock index at a record 0.82, according to Bloomberg data, any further deterioration in equity sentiment risks dragging Bitcoin down with it.