Cryptocurrencies sank further on Wednesday as investors, with a possible threat of inflation, shied away from assets considered to be at risk of any removal of monetary stimulus. Global stocks and digital coins were also under pressure following new Chinese restrictions on financial organisations in association with cryptocurrency transactions, reported Reuters.
"The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors," wrote Nikolaos Panigirtzoglou, including other JPMorgan analysts in a research note, reported Reuters. They added that the institutional investors seemed to have moved away from cryptocurrency to traditional gold, back-pedalling the trend of the previous two quarters.
STOXX 600 index of Europe remained at a 1.3% drop, which is on course to its most significant drop in over a week. MSCI’s gauge of stocks overall dropped by 0.4%. MSCI’s index of Asia-Pacific shares outside Japan dropped by 0.6%, and Nikkei of Japan dropped 1.3%, reported Reuters.
"Inflation remains the biggest theme, whether it is real and whether the Fed may need to change its policy because of that," said Kazushige Kaida, head of forex sales at State Street Bank at the Tokyo branch. "At the moment, markets are putting faith, after a fashion, in the Fed's narrative", reported Reuters.
Bitcoin earlier slipped to a significant drop of 13%, its lowest level since its association with the electric car manufacturing company, Tesla in February, bringing its loss from peak of $64,895 hit to $37,104, when last checked, in just over a month, reported Reuters.