Cryptocurrencies are plunging with bitcoin down by more than 12% today against the US dollar at the time of writing according to Coinbase.
Bitcoin has broken below $28,000 and is on track for its seventh consecutive weekly decline. Since the March peak it is down by more than 40% and has shed around 60% since the November high.
Victoria Scholar, Head of Investment, interactive investor says: “Shares in Coinbase are trading sharply lower pre-market having slumped 26% yesterday on the back of a weak first quarter scorecard in which the crypto platform reported a loss of $430 million, almost ten times bigger than analysts’ expectations. Its guidance was also disappointing with Coinbase warning of softer trading volumes and user numbers this quarter, as the crypto sell-off takes its toll. The stock is down by more than 85% from its opening price from April 2021 on its first day of trading as a public company.
“The crypto sell-off has been driven by the daunting macro backdrop of rising inflation and interest rates that has sent shockwaves through the tech sector, dragging cryptos down with it, confirming that bitcoin and others serve little purpose as a hedge against inflation. Stablecoins, which are digital tokens pegged to the value of traditional assets, have exacerbated this week’s crypto losses when one of the world’s largest, TerraUSD collapsed after losing its 1:1 peg with the US dollar. Unlike other stablecoins, Terra is linked to another token Luna, which slumped over 94% on Wednesday, dragging TerraUSD down with it.”
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