The Bitcoin (CRYPTO: BTC) price is down 5.6% over the past 24 hours.
The world's top crypto is currently trading for US$18,714 (AU$27,893).
With the Bitcoin price down 61% year to date, the token's market cap now stands at US$358.7 billion, according to data from CoinMarketCap.
That's a far cry from the US$1.3 trillion market valuation BTC commanded at its peak on 10 November last year.
In fact, with the vast majority of altcoins also sharply lower, the total crypto-sphere market cap has sunk below the US$1 trillion mark.
So, what's going on?
Image source: Getty Images
Why is the Bitcoin price in retreat?
Bitcoin and most all altcoins, stablecoins aside, have been trading in line with risk assets throughout 2022.
And risk assets have taken a drubbing as leading central banks pivot from a decade of accommodative monetary policies to aggressive tightening as inflation rates across the globe skyrocket.
In US markets, the tech-heavy NASDAQ fell 0.7% yesterday (overnight Aussie time). That's the seventh day of losses in a row for the index. The NASDAQ is now down 27.1% year to date.
And it's looking increasingly likely that the world's top economy may slip into recession.
A note out of Blackrock cautioned, "We think getting inflation back to central bank targets means crushing demand with a recession. That's bad news for risk assets in the near term."
And bad news for the Bitcoin price as well.
According to head of investment insights at IDEG Asset Management Kevin Loo (courtesy of Bloomberg):
The macro narrative is very hard to be able to let go and will drive risk assets. Bitcoin is below $20,000. We have been here before and it's likely that we could actually go slightly lower.
A buying opportunity?
However, the big Bitcoin price falls are seen as a buying opportunity by some crypto investors.
"Under the hood, moreover, I think you're seeing institutions gobble up coins when BTC drops below $20,000," founder of GOGO Protocol Garry Krugljakow said.
Loo also remains bullish on the long-term outlook for the world's original crypto.
"Bitcoin was at $3,000 in the first crypto winter and if you measure trough to trough, the trend is we are heading higher in the longer term," he said.
