Bitcoin is flirting with a test of this year’s lows following a cryptocurrency selloff that again pushed the sector’s overall market value below US$1 trillion (HK$7.8 trillion).
The largest digital token has shed more than six percent this week and was trading at about US$18,750 just after 7 am in New York.
Crypto market capitalization had fallen by a similar proportion over the previous 24 hours, according to CoinGecko. And ether erased Tuesday’s gains, dropping about 4.4 percent.
Surging real interest rates – seen as the true cost of borrowing – are heaping pressure on a range of risk assets, and crypto is no exception.
The retreat in bitcoin is taking it closer to a nadir of about US$17,600 that was hit in June in the wake of blowups at crypto lenders and hedge funds.
“The macro narrative is very hard to be able to let go and will drive risk assets,” said Kevin Loo, head of investment insights at IDEG Asset Management. “Bitcoin is below US$20,000. We have been here before and it’s likely that we could actually go slightly lower.”
At the same time, there remains residual optimism from the upcoming upgrade of the ethereum network, which analysts hope will lead to investment flows into ether and other digital assets.
“Bitcoin was at US$3,000 in the first crypto winter, and if you measure trough to trough the trend is we are heading higher in the longer term,” Loo said.
