Cryptocurrencies crash as interest rates rise; bitcoin down 20% YTD

Bitcoin and other crypto tokens, touted as a hedge against economic downturn and market fall, are crashing in tandem with stocks as central banks raise interest rates. On Sunday, bitcoin witnessed another bout of crash, slipping below $35,000. The global cryptocurrency market slumped 4.5% in the past 24 hours to $1.66 trillion.

Cryptocurrencies came under pressure after global central banks began raising interest rates to rein in rapid inflation.

Bitcoin has slipped 20% since the start of 2022 and continues to be volatile. Bitcoin was last seen trading at $34,400 while ethereum, the second most traded cryptocurrency slipped 4.8% to $2,545. Dogecoin was down 1.2% at $0.12 while Shiba Inu was down 4.9% to $0.00001887.

Other heavy traded digital tokens also crashed: Solana, Polkadot, Cardano, Uniswap, Terra, Avalanche, Litecoin, Polygon, Tron, Stellar trade with cut of 2-4% over the last 24 hours.

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The Reserve Bank of India raised repo rate by 40 basis points to 4.40% earlier this week. Last week US Federal Open Market Committee (FOMC) raised interest rates by 0.5%, making its biggest upward revision in over two decades.

Bitcoin has called 40% since US Federal Reserve laid bare plans to raise interest rates last November marking an end of an era of easy liquidity.

Bitcoin slipped 17% during the month of April, making it the worst monthly performer this year.

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Investors are seeking refuge in less risky assets as global market conditions remain bogged down by rising interest rates, supply-side concerns, and geopolitical risks.