(Bloomberg) -- Bitcoin extended declines on Tuesday as investor sentiment took another leg down over fears that bigger Federal Reserve interest-rate hikes loom to quell inflation.
The world’s largest digital token shed as much as 10.3% to reach $20,824, the lowest level since December 2020. A range of other tokens from Ether to Avalanche were also nursing losses.
“Sentiment for cryptos is terrible as the global crypto market cap has fallen below $1 trillion dollars,” said Edward Moya, senior market analyst for the Americas at Oanda. He added a drop below the $20,000 level could lead to “even uglier” price action.
Cryptocurrencies have become emblematic of a flight from speculative investments as monetary policy is tightened around the world to fight price pressures, draining liquidity from global markets.
Crypto lender Celsius freezing withdrawals on Monday exacerbated worries about the stress in the digital-asset sector, which was already on tenterhooks after the collapse of the Terra/Luna ecosystem.
Traders are also monitoring MicroStrategy Inc., whose big bet on Bitcoin is backfiring. Among the issues weighing on the company is the threat that an even deeper drop in the token’s price will require it to post additional collateral for loans.