FOLLOW US

Bitcoin plunged below $19,000 on Wednesday morning following a global drop in stock markets and the U.S. dollar's continued strength.

The total value of the cryptocurrency market also plummeted below $1 trillion as cryptos saw a sharp sell-off. Bitcoin was last trading slightly higher at around $18,955.34, according to Coin Metrics. 

Central banks around the world are grappling with inflation by tightening monetary policy. The U.S. Federal Reserve has launched a series of aggressive interest rate hikes totaling 2.25 percentage points. Analysts are expecting further interest rate rises.

Bitcoin has traded in correlation to stocks and so if they fall, in general, so does the cryptocurrency.

“The macro environment also continues to prove difficult with the dollar continuing to put in highs. This impacts all risk assets as we can see,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

“If we see the dollar start to move back down, then we should be able to get risk assets such as bitcoin move back up again.”

The crypto market has gone through mayhem this year, with nearly $2 trillion wiped off its value since its peak in November. Bitcoin is nearly 60% lower from its all-time high of $68,990.90, which was hit in November.

A challenging environment has caused the sell-off for risk assets and crypto-specific issues, including collapsed projects and bankruptcies that have erupted across the industry.

Bitcoin has been trading within a tight range of between $18,000 to $24,000 since June. Luno’s Ayyar said that in forming a bottom, “bitcoin typically likes to go back and test previous lows to see if they hold as support.”

Meanwhile, Ethereum is expected to soar following the highly anticipated Ethereum merge this month.

“Ethereum hit yearly highs against the bitcoin pair in anticipation of the merge,” Ayyar said. ” Hence there has been a lot more interest and activity in the Altcoin space while Bitcoin consolidates.”