The reality of tighter monetary policy continues to be felt in all markets, including the crypto markets. Bitcoin (BTC), which surpassed $40,000 a few days ago, crashed to as low as $32,500.
Bitcoin lost the critical $40,000 support level last week and failed to hold above subsequent support levels at $38,000 and $35,800. It could fall as low as $31,500 if the current levels fail to hold.
Major cryptocurrencies followed Bitcoin's decline, with Ether (ETH) losing 8.7% in the last 24 hours, while Cardano's ADA (ADA) and Solana's SOL (SOL) fell as much as 10%. Memecoin shiba inu (SHIB) dropped even more, falling 13%.
According to data, more than $411 million in crypto futures were liquidated in the last 24 hours. Of that, bitcoin futures accounted for about $140 million and ether futures for $121 million.
Bitcoin's initial declines over the weekend came at the same time that TerraUSD (UST) lost its peg to the dollar. The decline intensified on Sunday evening as Asian stock markets and U.S. equity index futures opened sharply lower as fears about the monetary policy response to rising inflation continued to grow. Japan's Nikkei ended the day down 2.5%, Europe's Stoxx 600 was down 2% at midday, and Nasdaq futures fell 1.5%.
Meanwhile, the U.S. dollar continues to benefit from the panic in the markets, while the Australian dollar and the Indian rupee suffered significant losses today.
Analysts had previously warned of a decline in bitcoin prices should the general economic outlook deteriorate further. "Professional money managers are not investing in risky growth stocks right now," Kurt Grumelart, a trader at crypto fund Zerocap, said in a Telegram message last week. "They can't overlook the current headwinds and high correlation to traditional markets," he added at the time, warning about Bitcoin's current price correlation with U.S. markets.