Cryptocurrencies fell to fresh lows on Monday on regulatory concerns and as investors globally turned shy on risky assets with interest rate rises looming around the world.
Bitcoin, the biggest cryptocurrency by market value, fell about 5 percent to a three-month low of US$18,387 (NZ$31,063).
Ether, the second largest cryptocurrency, dropped 3 percent to a two-month low of US$1285 (NZ$2170) and is down more than 10 percent in the last 24 hours. Most other smaller tokens were deeper in the red.
It's caused bitcoin users to wonder if the cryptocurrency is dead, and as written in a scathing opinion piece for Bloomberg, writer Jake Lloyd-Smith questioned what exactly the cryptocurrency was for.
"While that's been a tricky question to answer in years past, it's safe to say that right now, it's definitely not for preservation of wealth," he wrote.
"The shiny new thing is down 60 percent YTD against the grimy old thing (aka the USD). More losses may follow as the Fed hikes, with the bank's next installment due midweek."
The Ethereum blockchain, which underpins the ether token, had a major upgrade over the weekend called the Merge that changes the way transactions are processed and cuts energy use.
The token's value has fallen amid some speculation that remarks last week from US Securities and Exchange Commission chairman Gary Gensler implied the new structure could attract extra regulation.
Bitcoin's "collapse" and being down 73 percent since peaking last November is "quite a train wreck", as Lloyd-Smith put it.
"With delicious irony, the same week it registered a record, the Fed warned of perilous plunges for risky assets should the economy take a turn for the worse. As the US central bank responded belatedly to inflation, bitcoin tanked," he wrote.
Lloyd-Smith said he checks how bitcoin is performing in relation to gold - and it turns out that "neither are looking great" when the Federal Reserve "means business".
"But while gold's prospects look merely dim, bitcoin's look absolutely dire and a four-figure price isn't out of the question."
As bitcoin's value fell over the regulation speculation, trades around the upgrade also were unwound.
"It's speculation as to what might or might not happen," said Matthew Dibb, COO of Singapore crypto platform Stack Funds, on the regulatory outlook.
"A lot of the hype has come out of the markets since the Merge," he said. "It's really been a sell-the-news type of event," he added, given the nervous global backdrop, and said ether could test $950 in coming months.
"Looking at the landscape right now, both fundamentally and technically, it's not looking great. There's no immediate bullish catalyst that we can see that's going to prop up these markets and bring in a whole lot of new money and liquidity."
Reuters / Newshub.
