Bitcoin (BTC) continued its bearish action overnight, with the leading cryptocurrency dropping to a low of $18,993, according to data from CoinMarketCap.
After staging a recovery, Bitcoin is currently changing hands for around $19,140 a piece, down 4.8% on the day.
BTC has nearly lost half of its value over the past month amid serious inflation concerns and rate hikes announced by central banks including the U.S Federal Reserve.
The market capitalization of Bitcoin has plummeted from $1.27 trillion in November 2021 to under $366 billion today.
Ethereum (ETH), the second-largest cryptocurrency in terms of the market cap has also slipped to around $1,030, a 9% decline over the past 24 hours.
With its current market capitalization of under $125 billion, ETH is down 80% from its all-time high of $4,891.70, recorded in November 2021 per data from CoinMarketCap.
What’s driving the crash?
The primary catalysts behind the weeks-long cryptocurrency crash include sluggish DeFi activity, swelling digital asset fund outflows and the recently announced Fed rate hike.
The inflation rate peaked at 8.6% forcing the U.S. Fed to increase the interest rate by 0.75% has been a major factor in the recent bearish action.
Bank of Canada also raised its interest rate from 1% to 1.5% earlier this month. With increased interest rates, bond yields have spiked, reducing demand for high-risk investment assets including cryptocurrencies.
Last week, the total outflow of funds from digital asset funds (investment vehicles that provide traditional investors with cryptocurrency exposure) hit an all-time high of $453 million as per data from the CoinShares report.
As per data from DefiLlama, the total value locked (TVL) across all blockchains is down over 3.6% in the past 24 hours, indicating reduced user interest.
Popular decentralized finance (DeFi) platforms including Aave, Compound, Maker, and Lido have all seen their TVL slip by double figures over the past month.