According to statistics site CoinMarketCap, crypto assets have lost about $800 billion in market value over the last month, reaching a low of $1.4 trillion on Tuesday, as the end of free monetary policy reduces appetite for risk assets.
Bitcoin, which accounts for roughly 40% of the cryptocurrency market, fell to a 10-month low earlier on Tuesday before rebounding to $31,450, just six days after reaching $40,000. It was more than 54% lower than its all-time high of $69,000 on November 10th.
Digital asset values have fallen, matching a drop in shares on concerns about aggressive interest rate rises throughout the world to combat decades-high inflation. The Nasdaq (.IXIC) was down 28% from its peak high in November 2021.
According to CoinMarketCap, the total crypto market worth was $2.2 trillion on April 2, down from its all-time high of $2.9 trillion in early November.
“Bitcoin remains closely tied to larger economic conditions, implying that the road ahead may, unfortunately, be bumpy, at least for the time being,” stated blockchain data firm Glassnode in a note.
Investors were alarmed by signs of weakness in stablecoins, which are normally safer cryptocurrencies. TerraUSD, the world’s fourth-largest stablecoin, lost one-third of its value on Tuesday after losing its dollar peg.
Despite bitcoin’s price decline, funds and products related to it saw $45 million in inflows last week as investors took advantage of market weakness, according to a report issued on Monday by digital asset management Coinshares.
“Enormous amount of liquidity has inflated several of these cryptocurrencies,” said Nordea Asset Management’s Sebastien Galy, senior macro analyst. He anticipates that crypto, which is also connected with high-growth equities, would face pressure as various central banks tighten monetary policy.