The price of Bitcoin fell 5.3% to $ 33,879 on Sunday afternoon and is now roughly half the highest in history.
It was not immediately clear what caused the downturn, but the downturn in the cryptocurrency market over the weekend repeated the downturn in the broader stock market last week as investors moved away from riskier assets.
Bitcoin, the largest cryptocurrency, peaked at $ 67,802.30 in November 2021. It scored slightly more later on Sunday, at about $ 34,600.
The Federal Reserve’s announcement Wednesday to raise interest rates by half a point, the biggest increase since 2000 with additional increases expected this summer, brought the Dow Jones Industrial Average down Thursday by 1,063 points, or 3.1%. The S&P 500 fell 3.6% and the Nasdaq Composite 5%.
The tech-heavy Nasdaq Composite fell to its 52-week low on Friday, falling to 11,990.15. It fell by 22.4% over the previous year.
As part of its efforts to combat high inflation, the Fed is also starting to reduce its $ 9 trillion asset portfolio, but has ruled out raising interest rates by a more aggressive 0.75 percent.
At the same time, “risky assets” such as technology stocks and cryptocurrencies have been hurt as bond yields continue to rise. Yields on US Treasury reference 10-year bonds hit 3.15 percent on Friday, close to the highest level in four years. Higher treasury yields reduce the additional return on bonds that traders expect from riskier bets.
Last week, Phong Le, chief financial officer of software firm MicroStrategy, said during his first-quarter earnings call that he would face a call for margin if the price of Bitcoin drops to $ 21,000. In March,
raised a $ 205 million Bitcoin loan from Silvergate Bank to buy more Bitcoin and owned $ 5.9 billion in late March.
MicroStrategy raised the loan with 25% of the loan in value, and 50% of the loan in value “or about $ 21,000” would trigger a margin call. The company could contribute more Bitcoin to the collateral package, so it never gets to 50%, “so we never get into a margin call situation,” Le said, according to a conference call transcript.
Shares of MicroStrategy have fallen 62% since the price of Bitcoin peaked in November and have fallen 46% to date.
The price of ether, the second-largest digital asset, fell 6.8% on Sunday to $ 2,491. That’s after a 6% increase on Wednesday to nearly $ 3,000, its best daily performance since February.
Write to Janet H. Cho at [email protected]