Bitcoin slumped to Ksh.3.4 million ($30,000) for the first time since July 2021 on Tuesday as cryptocurrencies track sinking markets with investors spooked by aggressive U.S. monetary tightening and surging inflation.
The world’s largest cryptocurrency by market value fell as low as Ksh. 3,452,681.06 ($29,764) in Tuesday trade, before recovering above Ksh. 3,480,099.99 ($30,000), extending a recent collapse in price as investors desert assets viewed as risky.
Bitcoin’s value has more than halved since a November surge that saw the token hit a record of nearly Ksh.8,004,229.97 ($69,000).
While crypto enthusiasts view bitcoin as a hedge against inflation, an influx of more traditional investors tend to view it as a riskier asset.
They have been offloading bitcoin and other digital tokens along with other volatile assets like tech stocks as the U.S. Federal Reserve moves to hike interest rates to tackle decades-high inflation.
“Bitcoin is breaking below some key technical levels as the never-ending selloff on Wall Street continues,” said Edward Moya, senior market analyst for the Americas at Oanda.
“The institutional investor is paying close attention to bitcoin as many who got in last year are now losing money on their investment,” he added.
While the token’s “long-term fundamentals have not changed in months”, concerns about growth and a possible recession are creating “a very difficult environment for cryptos”, Moya said.
“No one is looking to buy the crypto dip just yet and that leaves bitcoin vulnerable here.”, he added.
The slump in crypto follows dives on U.S. equities and other markets, with the tech-rich Nasdaq closing down 4.3 percent on Monday, the S&P 500 declining 3.2 percent and the Dow ending off 2 percent.
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