Bitcoin plummeted by more than 7% in the last 24 hours, and was trading at $38,5K in the early hours of Friday.
Experts had warned previously that bitcoin might fall below $40K due to concerns of pending interest rates hike and crypto ban proposal set in place by the Russians.
Ether, the second-largest cryptocurrency by market cap, dived 8% in the last 24 hours. It was trading as low as $2,860 for the day according to data seen from FTX exchange.
For the day 185,480 traders were liquidated, with assets worth over $715 million.
The largest single liquidation order happened on Bitmex – XBTUSD value $9.91 million.
Binance had the most liquidations of all the exchanges, with $173 million, 91% of which were long positions. In second place was Asian-focused exchange Okex, with $170 million in longs.
A common investment case for the flagship crypto is that it serves as a hedge against rising inflation as a result of quantitative easing by global central banks in order to tame COVID-19 disruption in the global economy, but experts are saying the risk is that a more hawkish Federal Reserve may take the hit on Crypto assets.
The declines in crypto follow Wall Street losses on Thursday. The Nasdaq was down almost 5% this week, and the S&P 500 is into its third straight week of losses.
As the 10-year U.S. Treasury yield spiked earlier this week, rising rates have caused investors to shed their positions in riskier assets. Yields move opposite to prices.
The Federal Reserve has also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.
Since November, bitcoin prices have tumbled more than 40% from their record high of $69K.
As a result of intense price fluctuations and increased regulatory scrutiny, many industry experts predict that the crypto market will soon experience a downturn.
Regulators are also targeting cryptocurrencies. Besides the Chinese government banning all crypto-related activities, U.S. authorities are cracking down on several aspects of the market as well.
A Russian official has proposed banning the use and mining of virtual currencies on Russian soil, claiming it threatens monetary policy sovereignty and financial stability.