Bitcoin Drops below $42,000 as Crypto Slump Continues

Bitcoin fell to $41,603 on Tuesday, as the market sought to find a niche for the leading cryptocurrency after a month of declines.

According to data from CoinMarketCap, the price of Bitcoin is down about 1.5% in the past 24 hours.

Bitcoin's drop comes amid a decline in other major financial indicators, where the S&P 500 plunged  1.7%, while the Nasdaq noseped 2.3%. The CBOE Volatility Index (VIX), rose more than 18%.

Bitcoin has been a mess since the Fed’s meeting in early November, when the central bank announced that it would begin to scale back its bond purchases, reducing stimulus in the financial system.

After peaking above $51,000 in late December, the cryptocurrency dropped to around $41,000 in early January and has spent the past 10 days hovering around $42,000.

Roller Coaster

The price of Bitcoin has gone up and down over the past year or so, doubling in value at the beginning of 2021 and then losing it all, hitting this year's high later in 2021.

 Ethereum

It’s been a similar situation for Ethereum, the second-largest cryptocurrency by market capitalization. After setting a new all-time high above $4,800 in November, the price of the digital currency steadily eroded through December and into January. Ethereum was trading at $3,117 in the mid-afternoon.

It was a similar situation for Ethereum, It hit a new all-time high above $4,800 in November, the price of the digital currency eroded steadily through December and into January; to trade at $3,117.

Solana

Solana is also down nearly 50% from its all-time high of $260 in early November. It's price traded as low as $135 on Tuesday before rebounding above $137.

Expectations

The near-term expectations for cryptocurrency may not be so cheerful if the market looks to rely on liquidity from the Fed. In December, it announced that it was increasing its tapering pace, meaning that it will stop buying bonds by March.