Bitcoin (BTC) price falls below $19,000 as crypto market falls below $1 trillion

Bitcoin was trading below $19,000 on Wednesday morning, hitting its lowest level since June following a fall in stock markets globally and the continued strength of the US dollar.

The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board sold off.

Bitcoin was trading around $18,812.36 at 3:50 a.m. ET, down more than 5%, according to CoinDesk. Ether, which has outpaced bitcoin’s gains in recent months, fell more than 8% to $1,518.59.

Central banks around the world are battling rampant inflation with tighter monetary policy. The American central bank has carried out a series of interest rate increases totaling 2.25 percentage points. The markets expect further interest rate increases.

Policy tightening by the Fed has strengthened the US dollar which has weighed on risk assets. The 10-year US Treasury yield has also risen.

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

“The macro environment also continues to prove difficult with the dollar continuing to rally. This affects 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 go back down, we should be able to get risk assets like bitcoin to go back up.”

The crypto market has been battered this year with nearly $2 trillion wiped out since its peak in November. Bitcoin is about 60% off the record high of $68,990.90 hit in November.

The selloff has been caused by a tough environment for risky assets, as well as crypto-specific issues, including collapsed projects and bankruptcies that have spread across the industry.

Bitcoin has traded within a tight range between $18,000 to $24,000 since June. Lunos Ayyar said that by forming a bottom, “bitcoin usually likes to go back and test previous lows to see if they hold as support.”

He said that unless bitcoin falls below $17,500, the market is likely to consolidate within the $18,000 to $24,000 range.

Meanwhile, ether and so-called altcoins, or alternative coins, have managed to rise further than bitcoin. Ether has outperformed bitcoin since both cryptocurrencies hit a low in June.

Ether is the original cryptocurrency on the Ethereum network. Ethereum is planning a huge upgrade this month — known as the Merger — that proponents say will make the network more efficient.

“Ethereum hit annual highs against the bitcoin pair in anticipation of the merger,” Ayyar said. “That’s why there’s been a lot more interest and activity in the Altcoin space, while Bitcoin is consolidating.”