HONG KONG: Bitcoin fell to its lowest level since January on Monday, May 9 as the slumping equity markets continued to hurt cryptocurrencies, which are currently trading in line with riskier assets like tech stocks.
In morning trade, the price of the digital currency dropped to as low as US $33,266, testing the January low of US $32,951. A fall below that level would be its lowest since July of last year.
It slowed to trade around US $33,500, down 1.4 per cent.
Matt Dibb, COO of Singapore-based platform Stack Funds, said that everything within cryptocurrencies is still classed as a risk asset, and like what we've seen with the Nasdaq, most cryptocurrencies are getting pummelled.
The tech-heavy Nasdaq fell 1.5 per cent last week and lost 22 per cent year to date, hurt by the prospect of persistent inflation forcing the US Federal Reserve to hike rates despite slowing growth. Nasdaq futures were down 0.8 per cent in Asia trade on Monday morning.
Dibb said that other factors in the decline over the weekend -- bitcoin closed Friday at around US $36,000 -- were the crypto market's notoriously low liquidity over the weekend, as well as short-lived fears that an algorithmic stable coin called Terra USD UST could lose its peg to the dollar.
Stable coin is a digital token that is linked to other traditional assets, often the US dollar.
UST is closely watched by the community because of the novel way in which it maintains its 1: 1 dollar peg, and because its founders plan to build a reserve of US $10 billion worth ofBitcoin to back the stable coin, so volatility in UST could potentially spill over intobitcoin markets.
The world's second-largest criptocurrency, which is the basis for the ethereum network, fell as low as US $2,421 on Monday, its lowest since February.