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Bitcoin’s price is down 55% from its peak as plunging markets raise prospect of crypto winter

May 11, 2022, 2:46 PM UTC

Bitcoin sank below $30,000 on Wednesday as the overall cryptocurrency market struggles to regain upward momentum.

The largest cryptocurrency by market value had actually fallen as low as $29,330, according to CoinGecko, and it’s currently trading at around $31,000. That’s between a 55% and 57% decline from its November peak of $69,000. 

Analysts recently told Fortune that Bitcoin flirting with the $30,000 mark is cause for concern, warning that below this level, there could be potential ripple effects that accelerate losses. The phrase “crypto winter” is being raised in the crypto community, although the volatile market has seen declines and recoveries before.

A big wobble on Wednesday was fresh U.S. consumer price data, showing inflation rose yet again in April. The CPI increased 8.3% from a year ago, higher than estimated, as it has been for over six months now.

Terra’s algorithmic stablecoin, UST, is also applying downward pressure to Bitcoin. 

On Saturday, the Luna Foundation Guard (LFG), a reserve associated with Terra, announced it would issue $1.5 billion in loans denominated in Bitcoin and UST after the stablecoin fell dramatically. However, UST hasn’t regained a $1 value, falling to a new low of 29 cents on Wednesday.

“The longer this persists, the more this will increase the pressure on Bitcoin and add to investors’ anxiety,” Michael Safai, managing partner at Dexterity Capital, a quantitative trading firm focused on cryptocurrency, told Fortune on Monday.

Though Terra’s founder and CEO, Do Kwon, who created the stablecoin, shared a plan to help UST regain its peg earlier, it’s still trading at around 49 cents at time of publication.

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