The price of the virtual currency dropped to a six-month low on Saturday, extending a steep fall recorded in the previous session as investors withdrew their speculative assets.
The price of the biggest digital token by market value fell 4.3 percent in the European morning on Saturday to $35,127, the lowest level since July 2021. It has lost 25% of its value this year.
In the first month of the year, the top five cryptocurrencies were down 30 percent.
As investors dump shares in tech companies on expectations the US Federal Reserve will move to rein in loose monetary policy to combat inflation, thecryptocurrencies plummet. Global stock markets posted their biggest declines in more than a year this week, with the fast-growing companies that powered the rally from the depths of the coronaviruses crisis enduring intense falls.
The Fed is expected to raise interest rates three to four times this year, something that has sent bond yields soaring. Higher yields on low-risk assets like US government bonds make potential returns that can be earned through speculative investments look less appealing, analysts say.
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Andrew Sullivan, managing director at Outset Global in Hong Kong, said Asia was seeing huge volumes going through in a number of markets as investors move to cash on Friday.
On Thursday, the Russian central bank proposed banning all cryptocurrencies trading and mining. Russia is one of the world's largest centers for traditional currencies and is home to one of the world's largest banks that invests in cryptocurrencies.
The central bank said in its 36-page report that the rapidly rising value of cryptocurrencies is defined primarily by speculative demand for future growth, which creates bubbles, and that they also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market.
The announcement had little impact on the price of bitcoin, which rose as much as 3.7 percent against the dollar on Thursday. By Friday afternoon in Asia, the coin had dropped more than 10 percent from the previous day's high to hit its lowest level since August.
Vince Turcotte, Asia-Pacific sales director at Eventus Systems, said that the Russian regulators have been frustrated with thecryptocurrencies industry for several years.
He said that the Russian proposal was harsher than other announcements by regulators around the globe focused on protecting retail investors.
Turcotte likened the situation in Russia to that of China before Beijing began a more aggressive campaign against the industry. He said that nobody listened to Chinese officials until they brought the hammer down. Last year, China declared that allcryptocurrencies were illegal.
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