Sunday, April 14, 2024

Cryptocurrencies slide as market jitters continue

The value of Bitcoin has dropped to less than half of what it was at its peak last November. At the time of publishing, Bitcoin was down 7.6% in today’s trading to US$31,443.30.

The fall of the world’s largest cryptocurrency by market value comes as stock markets around the world have tumbled in recent days, the BBC reports.

On Monday, key European, Asian and US indexes slid lower again. Japan’s Nikkei index dropped 2.5%, while London’s FTSE 100 closed down more than 2%. In the U.S., the Dow Jones, S&P 500, and Nasdaq lost more than 1% in opening trade.

Uber was among the companies driving the declines. Shares in the company dropped more than 5% Monday after media outlets reported that chief executive Dara Khosrowshahi had warned staff that investors were becoming more cautious about investments. He said Uber would respond by cutting costs and slowing its hiring.

“It’s clear that the market is experiencing a seismic shift and we need to react accordingly,” he wrote in the letter.

“The average employee at Uber is barely over 30, which means you’ve spent your career in a long and unprecedented bull run. This next period will be different, and it will require a different approach.”

In times of market uncertainty, traditional investors will often sell what they see as riskier assets – such as digital currency – and move their money into investments perceived as safer.

Moves in cryptocurrency markets have increasingly followed wider trends, as professional investors, such as hedge funds and money managers, become more active in trading what was once the domain of individual investors and enthusiasts.

Bitcoin, which accounts for about a third of the cryptocurrency market with a total value of close to $640 billion, has seen its price plunge more than 14% in the last week.

Ethereum, the second biggest cryptocurrency in the world, is down by more than 10% in the last week.

Volatile trading in digital assets has not been unusual in previous years, but much of 2022 had been quiet for the cryptocurrency market.

Last week, central banks around the world, including the U.S., U.K. and Australia, raised interest rates as they attempt to tackle rising prices.

The U.S. Federal Reserve raised its key lending rate by half a percentage point, marking its biggest rate hike in more than 20 years.

That has triggered more concerns among some investors that inflation and the higher cost of borrowing could have a major impact on global economic growth.

Investors are also worried about the impact of the war in Ukraine on the world economy.

Meanwhile, in the last year, Bitcoin has become legal tender in two countries; El Salvador and the Central African Republic.

Since El Salvador said it would allow consumers to use the cryptocurrency in all transactions, alongside the U.S. dollar, the International Monetary Fund has urged it to reverse its decision.


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