Financial Associated Press (Shanghai, editor Yang Yongwu) news, as the Federal Reserve will soon raise interest rates and withdraw ultra-loose monetary policy, risk assets generally fell. The S&P 500 fell 5.2 percent in January, while the Nasdaq fell 8.9 percent in January. The biggest asset to fall, cryptocurrencies, shows that Bitcoin has now fallen by more than 18% monthly, the worst start to the year since January 2018 fell 29%.
(Bitcoin monthly decline, data source: Yingwei financial situation)
Other digital assets have also taken a hit, with second-place Ethereum falling about 30% in January. According to CoinGecko data, the current cryptocurrency market capitalization is about $1.8 trillion, the current bitcoin market capitalization accounts for 39.7%, and the Ethereum market capitalization accounts for 17.2%.
On January 24, Bitcoin briefly dipped to $33,000, a new low since July 2021, and has since begun to oscillate upwards. But from an all-time high of $69,020 in November 2021, Bitcoin has fallen nearly 50 percent.
(Bitcoin performance in the past 5 years, data source: Yingwei financial situation)
Regarding the recent sharp fall in bitcoin, Richard Smith, author of the Risk Rituals Newsletter, said that the 50% decline in bitcoin is due to the market narrative has shifted from pursuing risk to hedging, as the Fed and other central banks have begun to shrink their balance sheets, reduce stimulus, and ordinary people begin to realize that the impact of the epidemic is gradually decreasing, everyone will return to work, liquidity is decreasing, and investors will no longer invest in NFTs.
Morgan Stanley said that bitcoin's decline is not new, and this round of correction is within the historical norm.
Salvadoran President Nayib Bukele said on Monday that the price of Bitcoin should experience a "huge" rise because of the limited supply of the cryptocurrency and growing demand, which will drive the price higher. His prediction comes days after bitcoin fell nearly 20 percent this year and the IMF urged El Salvador to abandon bitcoin as legal tender. In a tweet posted Monday, Bookley said: "It is only a matter of time before prices rise significantly". His argument is based on Bitcoin's supply cap, as well as his estimate of 50 millionaires in the world.