The current sell-off ecosystem driving negative in the stock market is indirectly affecting the various prices associated with cryptocurrencies, main among them being Bitcoin, which currently sits at a lousy $31,076 as of writing. It's a 50% drop from its all-time high of $69,000 witnessed in Nov. of last year, and a remarkable fifth consecutive month of dippage, a 10-month low that has no sooner soured the cryptocurrency market.
Bitcoin isn't the only one being hurt by the stock market slump, evidenced via alternative dips in cryptocurrencies like Ethereum ($2,290), Solana ($64), Dogecoin ($0.11), and Polygon ($.80). This crypto market crash is proof enough of the extreme volatility of such digital assets, as well as painting a broader picture for those like Warren Buffett, who are not so keen on the crypto craze.
The stock market negatives are equated to the US Federal Reserve's rate hikes brought on by consistent inflation. Both the Nasdaq and Dow Jones have seen incredible losses, estimated at about 25% and 1,000 points, respectively. Jerome Powell, Fed Chairman, also cited the potential of more increases slated for the summer as the central bank starts to offload its $9 trillion coffers.
Inflation alone seems the biggest driver in the dropping market prices, but it's not the only factor that pits cryptos on their ever-decreasing free-fall. A major dilemma that has caused the negatives is due largely to the dollar peg dip experienced via TerraUSD over the weekend. TerraUSD is a stablecoin, meaning it derives its value from the US dollar, yet remains decentralized and on the blockchain.
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The stablecoin's head operator, Luna Foundation Guard, has been propping up its reserves with nearly $1.5 billion in bitcoin, which put it among the top 10 bitcoin wielders across the globe. It has set sights most recently on acquiring $10 billion worth of bitcoin for its reserves to back the TerraUSD stablecoin, which would make any volatility felt via the stablecoin also be felt by the bitcoin market.
Despite recovering, the slight dip in TerraUSD's price set crypto investors on a frenzy as concern spread that Luna Foundation Guard would start selling off its bitcoin reserves to aid its stablecoin. Thus, nerves are on edge across the board, from both average stock market insiders to crypto enthusiasts as prices wane in the afternoon of May 9th.
The year of 2022 hasn't exactly been sunshine and rainbows for cryptocurrencies. The global market cap now sits at a $1.40 trillion evaluation, according to CoinMarketCap, which although quite large is a 11.86% drop from the previous day. The aggregator also notes that $120 billion in volume has already been felt within the last 24 hours, proving of the vast moves investors are making as prices dwindle.
According to crypto exchange Luno's VP of corporate development and international, Vijay Ayyar, via CNBC, the potential of Bitcoin's drop below $30,000 proves it would only fall even further to a terrifying $25,000 before any bump in price can be felt.
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