Bitcoin fell to its lowest level since January which has led to equity markets resolving to cryptocurrencies, which are currently trading in line with riskier assets like tech stocks.
Bitcoin dropped to as low as $33,266 in morning trade, testing the January low of $32,951. A fall below that level would be its lowest since July last year.
It then steadied to trade around $33,500, down 1.4%.
“I think everything within crypto is still classed as a risk asset, and similar to what we’ve seen with the Nasdaq, most cryptocurrencies are getting pummelled,” said Matt Dibb, COO of Singapore-based crypto platform Stack Funds
The tech-heavy Nasdaq fell 1.5% last week, and has lost 22% year to date, hurt by the prospect of persistent inflation forcing the U.S. Federal Reserve to hike rates despite slowing growth. Nasdaq futures were down a further 0.8% in Asia trade on Monday morning. MKTS-GLOB.
Dibb said other factors in the decline over the weekend – bitcoin closed on Friday at around $36,000 – were the crypto market’s notoriously low liquidity over the weekends, and also short-lived fears that an algorithmic stable coin called Terra USD (UST) could lose its peg to the dollar.
Stablecoins are digital tokens pegged to other traditional assets, often the U.S. dollar.