The collective value of the cryptocurrency market has slumped beneath US$1 trillion on Monday after some US$200bn was wiped from the market over the weekend.
Bitcoin slumped just over 15% on Monday down to US$23,150 which now positions the leading crypto asset where it was prior to the 2021 surge which saw it trade up as high as US$67,500 in November.
At the same time, Ethereum dropped over 19% to US$1,196, leaving it a long way away from its November 2021 high of US$4,800.
Having dropped some 13.67% in aggregate, the global crypto market capitalisation is now calculated at US$959bn, according to coinmarketcap.com.
Nasdaq-quoted MicroStrategy Incorporated, which holds some 130,000 Bitcoins which crypto-evangelist and chief executive Michael Saylor said the company will never sell, saw its shares collapse by around 25% amidst reports that it is facing a margin call.
MicroStrategy is an analytics software company which has also used Bitcoin holdings as collateral for convertible bond financing and a portion of its Bitcoin holdings were acquired through borrowing.
Elsewhere, crypto exchanges were also focal points for volatility as Binance suspended client withdrawals because of a “stuck” transaction.
Initially, chief executive Changpeng Zhao told followers on Twitter that the problem would be fixed in 30 minutes, but later said it would “take a bit longer to fix”
Inflation, among a myriad of other volatility triggers, was seen as a cause of the latest crypto sell-off.
UK stockbroker Hargreaves Lansdown, in a note, said Bitcoin and Ether are continuing to get a “severe bruising”.
“They are prime victims of the flight away from risky assets as investors fret about spiralling consumer prices around the world,” said analyst Susannah Streeter.
“The worry is that inflation is becoming too hot to handle by central banks who will be forced to douse economies with jets of freezing water, in the form of much steeper interest rate rises, to get it under control. With the era of cheap money coming rapidly to an end, traders are becoming much more risk averse and turning their backs on crypto assets.”
She added: “Red lines on a chart belie the financial pain which this loss of value is set to cause for millions of crypto holders. Data from the UK’s Financial Conduct Authority showed that 14% of adults who had bought crypto during the pandemic had got into debt to do so.
“At a time when costs are escalating all over the place, nursing a big hole in a crypto wallet is the last blow they need. It’s a stark reminder that dabbling in the crypto wild west is highly risky and investments in such assets should only be at the edges of a portfolio, with money you can afford to lose.’’