By Paul R. La Monica, CNN Business

(CNN) – So much so that bitcoin is digital gold.

The world’s most valuable cryptocurrency fell 10 percent on Monday after falling again over the weekend. Bitcoin prices have fallen by nearly 20% in the last week. Priced at just under $ 31,000, bitcoin is more than 50% below its record high of nearly $ 69,000 since the end of last year and at its lowest point since July 2021.

Other cryptocurrencies, sometimes called altcoins, have also been hit hard. Ethereum, binance, solana and cardano fell about 15% in the last week, while Elon Musk’s favorite dogecoin fell 10%.

Cryptocurrencies are proving to be as risky as stocks and prone to the same fears that are dragging down the Dow, S&P 500 and Nasdaq.

On Monday, the S&P 500 fell 3.2% to 16.8% from its January 3 record. The Dow fell 2%, while the Nasdaq fell 4.3%.

“Variable trading in digital assets has not been so uncommon in previous years,” said Michael Kamerman, CEO of the Skilling trading platform. “Cryptocurrencies are increasingly moving in line with technology stocks, with investors being treated as risky assets at the same time and often withdrawing to safer corners of the market during bouts of market volatility.

Kamerman said he was still optimistic about bitcoin in the long run. More hedge funds and other large institutions are starting to invest in cryptocurrency, and some global central banks are also starting to accept it.

But he added that bitcoin is not immune to the global risk of inflation that spreads to most other asset classes. That is why we should expect to see the downward trend continue. “

Fears of inflation, concerns about large increases in Federal Reserve interest rates and concerns about a possible economic slowdown have shaken Wall Street and led to a sharp rise in bond yields.

Yields on 10-year treasury bonds are now just over 3.1%, more than doubling this year. Long-term bond yields are now at their highest level since November 2018.

The jump in yields also helped boost the value of the dollar, which tends to rise in tandem with interest rates. The US dollar index is now trading near its highest level in twenty years. This is also bad news for bitcoin, as many cryptocurrency supporters point to the weakness of the dollar as a rising sign for digital currencies.

As rates (and dollars) continue to rise, some crypto skeptics believe bitcoin sales have only just begun. The Federal Reserve is beginning to withdraw from monthly bond purchases and other incentives, which could be bad news for all types of speculative assets.

“The Fed’s dramatic reversal of liquidity will break the bubble of the era of the cryptocurrency pandemic, technology-losing technology companies and meme stocks,” said Jay Hatfield, chief investment officer of Infrastructure Capital Management and manager of InfraCap Equity Income ETF.

Hatfield said he believes bitcoin could fall to $ 20,000 by the end of the year.

The crypto collapse is also hurting several stocks with exposure to the industry. Broker Coinbase fell 17% on Monday to more than 65% this year. Robinhood, which also allows people to buy and sell some cryptocurrencies, has fallen by more than 45% in 2022.

Shares of several cryptocurrency diggers, companies that run servers that solve the complex mathematical puzzles needed to generate new bitcoins and other cryptocurrencies, have also fallen. Hive Blockchain, Marathon Digital Holdings and Riot Blockchain have fallen by between 50% and 60% this year.

The mass withdrawal of these and other impulse technology stocks is another sign of the rapid change in market sentiment this year. The CNN Business Fear & Greed Index, which measures seven market sentiment indicators, is in Extreme Fear.

Investors may continue to avoid variable cryptocurrencies in favor of safe havens, such as blue-chip stocks that pay dividends.

Traders are “more reluctant to accept the additional risk associated with the crypto area,” said Tammy Da Costa, an analyst at DailyFX, in a report.

She added that “the future of individual coins or tokens remains questionable” and that “rising interest rates are likely to jeopardize short-term earning potential” in bitcoin, ethereum and other established cryptocurrencies.

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Bitcoin plummet continues, now at less than half its November high

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