Bitcoin plunges to lowest level of the month as trading volumes fall

Bitcoin (BTC) fell to $16,300 on Monday, its lowest price level since November 29. The drop in the price of the leading crypto-currency coincided with a downward trend in major stocks amid market fears of continued credit tightening policies by central banks.

The top crypto-currency fell 1.9 percent on Monday, while Ethereum’s crypto-currency ether dropped 2.1 percent to $1,168, according to the CryptoNews Price Index. The S&P index fell for the fourth time on Monday and has depreciated 6.9 percent over the past five days.

In recent hours, the price of bitcoin has rallied, confirming that the market remains highly volatile. At the time of writing, bitcoin is trading at USD 16,799.

After a market rally last week following a moderate drop in the US inflation figure, the latest interest rate hike by the US Federal Reserve has sent the price of bitcoin and major stock indices lower.

Although the U.S. rate hike was 0.5 percent, following four consecutive 0.75 percent hikes, the Fed signaled that it would continue to raise rates in early 2023 in order to control inflation.

This dynamic of tightening monetary policy to slow rising prices is being pursued by many central banks around the world. Interest rate hikes are also being implemented in Europe to restrict credit in an anti-inflationary effort.

According to figures from bitcoinity.org, weekly bitcoin trading volume saw a sharp increase in the second week of November, due to capital flows following the FTX crash. That week, weekly bitcoin volume exceeded $650 billion, while subsequent weeks were dominated by volumes below $300 billion.

Crypto-currencies have had a rough 2022. Thirteen months have passed since bitcoin’s all-time high, and the price decline has been exacerbated by restrictive central bank policies, implosions in the Terra/Luna ecosystem and the recent FTX exchange debacle.

Among the predictions for the price of bitcoin in 2023, analytics firm Ecoinometrics considers two scenarios. In the case where the price floor has already been reached, the predicted range for the price of BTC in 2023 is USD 27,000 to USD 33,000. In the case where the floor has not yet been reached, the estimate range is much more modest: USD 15,000 to 20,000.