Bitcoin tumbled on Monday to an 18-month low of under $25,000 as investors shunned risky assets in the face of a vicious global markets selloff, months after the cryptocurrency hit a record high.
The unit took a heavy knock also from the news that cryptocurrency lending platform Celsius Network paused withdrawals, citing volatile conditions.
World stock markets have plunged since Friday when data showed US inflation at a fresh four-decade high, increasing recession fears and sending investors running for safer assets like the dollar.
“It is not very surprising to see such a strong downturn as we have noticed an increased correlation over the last few years between traditional stocks, which have also tanked recently, and the cryptocurrency market,” noted XTB chief market analyst Walid Koudmani.
The world's most popular cryptocurrency dived about 10 per cent to hit $23,794 in morning London deals, striking a level last seen in December 2020.
The virtual unit has collapsed by 65pc in value since striking a record peak of $68,991.85 in November 2021.
Investors on Monday sought safety with the US central bank seen likely to aggressively ramp up borrowing costs further to combat runaway inflation.
Bitcoin's decline accelerated after the news from Celsius Network.
“Today we are announcing that Celsius is pausing all withdrawals, swap, and transfers between accounts,” the platform said in a statement.
Celsius made the move “due to extreme market conditions”, it added.
The total value of customer deposits had already shrunk by more than half to under $12 billion in May compared with the end of last year.
Cryptocurrency market value slumps under $1 trillion
Meanwhile, the value of the cryptocurrency market on Monday fell below $1 trillion for the first time since January 2021, according to data site CoinMarketCap, reaching as low as $926 billion.
The global cryptocurrency market peaked at $2.9 trillion in November 2021, but it has faltered so far this year.
"As inflation proves to be an even trickier opponent to beat than expected, Bitcoin and Ether are continuing to get a severe bruising in the ring," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"They are prime victims of the flight away from risky assets as investors fret about spiralling consumer prices around the world."
In a sign of the growing importance of cryptocurrencies, two countries, El Salvador and the Central African Republic, have taken the gamble of adopting bitcoin as legal tender — despite strong criticism from international financial institutions.