The prices of bitcoin, ethereum and other cryptocurrencies have crashed as the crisis in Ukraine rattles global investors.
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Bitcoin price, falling below $38,000 per bitcoin, is down 10% this time last week and nearly 30% from its early February high of nearly $46,000. Ethereum, the second-largest cryptocurrency after bitcoin, saw similar declines, with fierce competition weighing on the price of ethereum.
Now, as assets that have soared over the past two years are seeing strong sales in the face of impending Federal Reserve interest rate hikes, a billionaire value investor has warned that some are going to be badly hit by the next “cataclysmic market shift”. “
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“I think there will be a few people who have really overshot their skis and hurt themselves badly,” the anonymous billionaire said. Initiatedwith bitcoin and crypto named as well as blank-check SPACs and retail-led meme stocks as examples of over-the-top market exuberance.
The bitcoin and crypto market reached a combined value of around $3 trillion in November last year, up from less than $300 billion two years ago.
“We really hit dumb peak, but dumb peak extended beyond really, really dumb, and then we went to see dumb rare-earth metal companies at the bottom of the ocean.”
Big stock market gainers during pandemic-era lockdowns – such as Coinbase, Peloton, Zoom and PayPal – have fallen sharply from their recent highs, with the likes of Facebook’s Meta and Elon Musk’s Tesla falling also hard as investors grapple with a return to normalcy.
Fed Chairman Jerome Powell sparked the selloff in November when he signaled an end to the Fed’s accommodative monetary policy to combat soaring inflation. Investors are now bracing for an interest rate hike in March, and more are expected to follow.
The price of bitcoin – along with ethereum and other major cryptocurrencies – has traded more like a high-growth tech stock since mid-2020 and crashed with them in recent months. Traders now focus more on potential downsides than upsides.
“$32,500 [per bitcoin] looks more like the “point of no return,” John Kicklighter, chief strategist at DailyFX, said via email. directional variability depending on what world leaders decide.”
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“U.S. markets are closed for President’s Day, but few on Wall Street will be sorry as they gaze at the sea of red displayed by their European counterparts,” AJ Bell financial analyst Danni Hewson wrote in a note sent by email.
“The scene is set for another volatile week as investors consider which stocks could be affected if Russia escalates tensions by sending troops into areas held by Russian-backed separatists.”
Last week, bitcoin’s price “began to fall sharply in unison with stock indices,” wrote Alex Kuptsikevich, senior financial analyst at FxPro, in comments via email. “The drop in risky assets was caused by the growing tension around Ukraine, where the situation is tense.”
Kuptsikevich pointed to comments by Ethereum co-founder Vitalik Buterin that many crypto developers would “welcome” another crypto winter period with prolonged low prices and a return of the closely watched Bitcoin Fear and Greed Index. returning to “extreme fear” territory.
“People who are deep into crypto, and especially into building things, a lot of them welcome a bear market,” Buterin said in an interview with Bloomberg on the sidelines of an Ethereum conference in Denver, Colorado.