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By Lee Min-hyung
The prices of Bitcoin and Ethereum took a nosedive on Tuesday amid escalating fears that monetary authorities here and abroad will step up their fight against inflation with more aggressive monetary tightening.
Bitcoin's price plunged to an 18-month low, failing to defend the 30 million won ($23,200) mark. Ethereum, the world's second-most-valuable cryptocurrency, also plunged by more than 30 percent in the past week. Ethereum was traded at around 1.52 million won on Tuesday afternoon, a drop of more than 70 percent from its previous high in November 2021, according to data from Korea's largest crypto exchange, Upbit.
This year, crypto investors have been spooked by the U.S. Federal Reserve's monetary normalization. After ending its near-zero interest policy in March this year, the Fed has since raised its benchmark rate to 1 percent. But with the world's largest economy grappling with soaring inflation in the wake of the pandemic, the Fed is sending repeated signals for additional rate hikes.
Last month, an unexpected meltdown of the once-promising Terra and Luna coins heightened the fear sentiment in the global crypto industry.
Given that Bitcoin and Ethereum are considered safer assets than any other cryptocurrencies, the ongoing collapse of the two symbolic cryptocurrencies is widely forecast to continue casting a gloomy sentiment across the overall crypto market.
Data from CoinMarketCap also showed a major crash of other large-cap cryptocurrencies ― such as BNB, Cardano and Solana. Most cryptocurrencies that have their market cap included in the global top 20 extended losses in line with the recent plunge of Bitcoin and Ethereum.
Market experts remain poles apart over whether Bitcoin will be able to bounce back in the foreseeable future.
"It has been a rough few days for crypto traders," said Edward Moya, a senior market analyst at OANDA. "Sentiment for cryptos is terrible as the global crypto market cap has fallen below $1 trillion. Bitcoin is attempting to form a base, but if price action falls below the $20,000 level, it could get even uglier."
His remarks came after Celsius, a crypto lending platform operator, paused withdrawals from investors on Monday, sparking fears of a bank run. Binance, the world's largest crypto exchange, also paused withdrawals of Bitcoin temporarily on the same day.
But some other experts expected Bitcoin to regain momentum for a rally.
"The current price level of Bitcoin looks to be attractive to those who consider investing in it with a medium- to longer-term viewpoint," said Lee Mi-sun, the research center chief at Bithumb. The expert predicted Bitcoin prices would achieve a rebound sometime around 2023.
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