Bitcoin freefall continues; erodes $13,000 of value in 8 sessions

The sell-off trend in all digital asset classes continues as Bitcoin, the world's largest cryptocurrency, tanked below $26,000, which is the lowest since December 28, 2020, according to Coinbase data. The crypto has recovered a bit and is trading at $27,604.56, still 11% down in the past 24 hours. It has lost $13,000 of its value in the past eight sessions.

The crypto had touched $68,789.63 in November last year, its highest ever. Analysts suggest that a major drop in crypto prices has been triggered by a downward rally in tech stocks, with Nasdaq dropping 378.3 points on Wednesday and 6.4% this week alone. TerraUSD, which is one of the largest stablecoin, also fell as low as 30 U.S. cents, which has caused concerns in the crypto industry.

Bitcoin dropped over 60% from its peak price last year. The major fall in Bitcoin is seen in the context of a larger sell-off in the global market amid weak sentiments since the Fed hiked the interest rates.

Ethereum, which is the second biggest crypto, has also dropped 21.59% in the past 24 hours to $1,870.59. It sank to as low as $1,833, which is its lowest since July 2021. This is over a 60% fall from its all-time high of $4,891.70 in November last year.

Popular digital coins like Dogecoin and Shiba Inu fell 28.81% and 32.01% in the past 24 hours, respectively. The year 2022 has been a quieter period for the digital assets so far.

A similar pattern has been seen in key indexes across the world. Indian equity benchmarks, the BSE Sensex and the NSE Nifty, have seen a sharp fall of 1,085.18 and 342.45 points, respectively.

The Dow Jones Industrial Average was down 326.63 points or 1.02%, while the S&P 500 saw a 1.65% or 65.87 points drop. Nasdaq Composite dropped 3.18% on Wednesday, continuing the negative global trend. Japan's Nikkei Index also dropped 464.92 points or 1.77%. London's FTSE 100 Index was also down 2.55% or 187.65 points at 7,160.05.

The global trend in asset sell-off comes was triggered after central banks across the world, including India, the U.S., the U.K. and Australia raised key interest rates to tame rising inflation due to supply chain issues and geopolitical crisis in the wake of the Russia-Ukraine war. The US alone has resorted to a 50 bps rise in lending rates, which is its biggest hike in the past 20 years.