The price of Bitcoin (BTC) has fallen below $40,000 U.S. for the first time since last August after tumbling 10% in 24 hours to currently trade at $38,700 U.S. per coin.
The price of Ethereum (ETH) also fell, combining with Bitcoin to wipe off nearly $150 billion U.S. from the broader cryptocurrency market.
Bitcoin fell as low as $38,287 U.S. per coin overnight, according to CoinDesk. Etherrum, the second-largest cryptocurrency by market capitalization, dived nearly 8% in the last 24 hours to as low as $2,809.51 U.S.
The declines in cryptocurrencies follow Wall Street losses this week. The Nasdaq index has fallen almost 5% this week and is down nearly 12% so far in January, putting it in correction territory. The benchmark S&P 500 index is in its third straight week of losses.
The U.S. Federal Reserve has indicated that it plans to begin reducing its balance sheet, as well as tapering bonds and raising interest rates this year.
A common investment case for Bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of Bitcoin’s sails.
Bitcoin prices have fallen sharply since November, tumbling more than 40% from a record high of about $69,000.
Some analysts warn that the cryptocurrency market could be heading toward a prolonged downturn as heightened regulatory scrutiny and intense price fluctuations dampen the prospects for the biggest cryptocurrency.
