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Crypto rout continues to batter bitcoin

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Bitcoin ATM in a mall allows to buy and sell Bitcoin crypto. Orange BTC cryptocurrency exchange machine. Warsaw, Poland - October 23, 2021
The price of bitcoin slumped as low as $19,700 on Monday. Photo: Getty

The crypto market is braced for further turmoil after more than $900bn (£734bn) was wiped off the bitcoin (BTC-USD) market since last year’s peak.

The price of bitcoin slumped as low as $19,700 on Monday after volatile trading over the weekend, saw it dip below $20,000 for the first time since November 2020.

Read more: Bitcoin's next support level? Why 'perhaps it’s $15,000.'

Bitcoin tumbled under $18,000, striking a low of $17,600 over the weekend.

The sell-off represents a 71% decline in the value of the most actively traded token from its peak of $69,000 in November last year. Bitcoin was up 4.8% to $20,589 at the time of writing.

Ethereum (ETH-USD), the second most popular cryptocurrency, has fallen by 78% during the same period. Ether was up 8.9% to $1,145.85 on Monday.

The global crypto market cap fell to $901bn, a 7% decline in the last 24 hours, according to data from Coinmarketcap.

The market turmoil also caused Magic Internet Money (MIM-USD), the so-called stablecoin, to de-couple from the US dollar over the weekend, as the value of the coin dropped as low as $0.9098 on Saturday. It was up 0.2% to $0.99 on Monday.

Terra (LUNA1-USD), a rival stablecoin, broke its peg to the greenback and collapsed last month after substantial withdrawals by investors.

Read more: Crypto live prices

It comes as soaring inflation and tightening monetary policy reduced trader appetite for riskier assets like bitcoin.

Investors had been willing to take more risk on speculative investments before global central banks raised interest rates from record lows to decades highs.

The deepening crypto market rout has stoked fears that further selling could materialise among investors that have borrowed to boost their holdings.

"Exchanges all over the place are halting withdrawals amid liquidity problems as investors (bagholders) rush for the exits," said Neil Wilson, chief markets analyst at Markets.com.

"Rising interest rates, an acute risk-off mood across markets, a thinning of liquidity is all to blame: in short the end of free money from the Fed means the artificial pump that created these assets is no longer working."

Read more: Bitcoin slump deepens in crypto meltdown

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Bitcoin is still being whipped by winds of worry as the investors flee the crypto world in their race away from risky assets. It’s dipped back below the key milestone of $20,000, a price it last hit back in 2020 when the cryptocurrency was on its way up to dizzying heights.

"This time it’s hurtling down in value and although we’ve seen coins and tokens hit by extreme volatility in the past, the indications are that this decline may not be reversed any time soon and that a crypto winter could be settling in."

Watch: What are the risks of investing in cryptocurrency?

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