Bitcoin, other cryptocurrencies slump amidst broader stock market sell-off amidst central bank interest rate hike and economic uncertainty
The value of Bitcoin continued to fall over the weekend and in early trading on Monday, dropping below $32,000 (£25,900), after turmoil in cryptocurrencies and conventional stock markets last week.
The largest cryptocurrency is now down more than 50 percent from its high of $67,802.30 in November 2021.
Bitcoin accounts for about one-third of the total cryptocurrency market and has a market capitalisation of nearly $640bn.
Ethereum, the second-largest cryptocurrency, has also fallen by about 10 percent in the past week.
The latest sell-off comes after central banks in countries including the US, UK and Australia last week raised interest rates in an effort to combat inflation.
The US Federal Reserve raised its key lending rate by half a percentage point last Wednesday, its biggest rate hike in more than 20 years.
The move has raised concerns for some investors that higher prices and higher borrowing costs could slow worldwide economic growth.
Investors also fear the economic effects of the ongoing conflict in Ukraine.
On Thursday the Dow Jones Industrial Average lost more than 1,000 points and the Nasdaq dropped by 5 percent, their worst single-day losses since 2020. Both continued to fall on Friday.
For much of its history Bitcoin and other cryptocurrencies were dominated by individual investors, but more recently institutions such as hedge funds and money managers have bought into digital assets.
This has seen cryptocurrencies increasingly follow the movements of conventional stock markets, including sell-offs affecting riskier assets, such as technology shares, in times of economic uncertainty.
In the meantime, venture-capital investment into other so-called web3 markets such as non-fungible tokens (NFTs) and decentralised finance has continued to soar.
Venture capital in crypto projects such as blockchain-based apps and cryptocurrency-based platforms totalled $10bn worldwide in the first quarter of this year, more than double the level for a year ago, according to Pitchbook.
Bitcoin itself last year became legal tender in two countries, El Salvador and the Central African Republic, even as the International Monetary Fund urged El Salvador to reconsider its decision.