Bitcoin drops to six-month low as selloff continues

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Bitcoin dropped to a six-month low on Friday, sinking well below the $40,000 threshold as investors cut down on their cryptocurrency holdings.

The price of bitcoin was down approximately 10 percent to $38,737 as of late Friday morning, according to data from the CoinBase exchange. Earlier, the leading cryptocurrency’s price fell below $38,000 for the first time since last July.

Bitcoin has fallen steadily since hitting an all-time high of $69,000 per token last November.

The ongoing selloff has also impacted other leading crypto tokens. Ether dropped about 12 percent to $2,854, while solana dropped 14 percent to $122.75.

The decline for cryptocurrencies this year has coincided with a selloff of major tech stocks.

The trend is a sign that investors are increasingly weighing the global economic climate while considering their crypto holdings and cutting down on riskier assets.While bitcoin’s value plunged, the tech-heavy Nasdaq Composite entered correction territory this week as the expected withdrawal of pandemic-era Fed support and rising inflation roiled US markets.

Several other factors are also contributing to the volatility among top digital currencies.

The selloff has intensified since December, when minutes from the Federal Reserve’s December Federal Open Market Committee minutes showed officials were planning to hike interest rates sooner than expected during an inflation surge.

Fears of a regulatory crackdown are also having an impact. Russia, the world’s third-largest cryptocurrency mining market, is considering a full ban on digital currencies. Russian officials argue cryptocurrencies could cause financial instability, Reuters reported.

Bitcoin sank well below the $40,000 threshold on Friday as investors cut down on their cryptocurrency holdings.
Bitcoin sank below the $40,000 threshold down to $38,737 on Friday.
Getty Images/iStockphoto

Earlier this month, violent protests rocked Kazakhstan, the Central Asian country known as the world’s second-largest crypto mining center. The country’s internet was shut down, essentially bringing mining efforts to a halt.

While cryptocurrencies have proven prone to volatility in recent years, proponents say their long-term outlook remains strong. Goldman Sachs recently predicted the price of bitcoin could exceed $100,000 within a few years as the leading token gains popularity as a “store of value” alternative to gold.

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