Bitcoin (BTC-USD) and ethereum (ETH-USD), the two largest cryptocurrencies by market cap, are falling back under key levels in Wednesday afternoon trading, as stocks and other risk assets take a beating.
Over the past 24 hours, bitcoin (BTC-USD -3.8%) is drifting to $28.7K as of shortly before 12:30 p.m. ET. Ethereum (ETH-USD -4.7%) is getting dragged down to $1.93K. Likewise, all three major U.S. stock market indices are dipping by at least 2% each amid a slew of poor economic data and a more hawkish Fed.
Bitcoin's (BTC-USD) drop of 50% from its Nov. 2021 record high might just be the beginning of an even more extended decline seeing that "Bitcoin's forward returns following a 55%+ drawdown tend to be flat or negative over the following six months," Ronnie Stoeferle, a fund manager and author, wrote in a Twitter post.
And the global crypto market cap has lost more than half of its value since its peak in Nov. 2021, recently standing at $1.24T, according to data from CoinMarketCap. This doesn't come as much of a surprise since the combined market value of bitcoin and ether (~$788B) accounts for the majority of the cryptosphere.
Risk assets' intraday downturn comes a day after Fed Chair Jerome Powell's hawkish remarks, emphasizing that the central bank won't hesitate to go past the neutral interest rate "if we have to." In addition, it's clear that many sectors of the economy such as manufacturing and housing are slowing down, as a raft of data released over the past week missed expectations amid higher interest rates and tighter financial conditions.
See why Wells Fargo thinks a recession is now the base case scenario.
Other major cryptos deep in the red include: polkadot (DOT-USD -8.4%), solana (SOL-USD -7.4%), cardano (ADA-USD -7.7%), avalanche (AVAX-USD -8.2%), polygon (MATIC-USD -8.0%), NEAR protocol (NEAR-USD -8.3%), algorand (ALGO-USD -6.8%), cosmos (ATOM-USD -8.0%) and Monero (XMR-USD -6.0%).
Crypto-focused stocks like MicroStrategy (MSTR -8.2%), Riot Blockchain (RIOT -8.6%), Marathon Digital (MARA -7.9%), Coinbase Global (COIN -6.5%) and Silvergate Capital (SI -6.8%) are also grinding lower as well.
Earlier this week, (May 17) bitcoin climbed over $30K.