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The reality of tighter monetary policy continues to be felt in all markets, including crypto, with the price of bitcoin (BTC) – which days ago topped $40,000 – falling to as low as $32,500.
Bitcoin lost the critical support level of $40,000 last week and did not hold above subsequent support levels at $38,000 and $35,800. It could drop to as low as $31,500 if current levels fail to hold.
Crypto majors followed bitcoin’s drop: Ether (ETH) lost 8.7% in the past 24 hours, while Cardano’s ADA (ADA) and Solana’s SOL (SOL) dipped as much as 10%. Memecoin shiba inu (SHIB) took an even bigger hit with a 13% fall.
Bitcoin’s initial weekend declines came alongside TerraUSD (UST) losing its peg to the dollar. The fall added steam on Sunday evening as Asian equity markets and U.S. stock index futures opened sharply lower, with fears continuing to grow about the monetary response to surging inflation. Japan’s Nikkei ended the day 2.5% lower, Europe's Stoxx 600 is down 2% at midday, and Nasdaq futures are down 1.5%.
The U.S. dollar, meanwhile, continues to benefit from panicky markets, with the Australian dollar and Indian rupee notable losers today.
Analysts previously warned about a drop in bitcoin prices if the broader economic outlook continued to sour. “Professional money managers aren't loading up on high-risk growth assets currently,” said Kurt Grumelart, a trader at crypto fund Zerocap, in a Telegram message last week. “You can't look past current headwinds and high correlation to traditional markets,” he added at the time, warning about bitcoin’s current price correlation with U.S. markets.