Bitcoin has fallen below US$30 000. The world’s largest cryptocurrency is now 54% below the high of $64 870 reached on 14 April.

Chartists say the decline below the $30 000 level could exacerbate bitcoin’s decline and set it up for its lowest close since the start of the year.

The retreat comes amid a broader risk-off environment that’s also seen US equities fall due to fears of slowing growth and a relentless spread of the delta variant of Covid. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital coins, fell as much as 5.7% to its lowest point in nearly a month.

“Investing in these cryptocurrencies is based on confidence and liquidity, and as you have a little bit less confidence, you just have a more challenging short-term environment for the cryptocurrencies,” said Keith Lerner, chief market strategist at Truist Advisory Services.

That’s also put bitcoin’s claim of being an inflation hedge to test. Fans had argued the digital asset could, thanks to its limited supply, act as a hedge against rising prices. The coin has declined more than 10% so far in July and its year-to-date advance has narrowed to just 6%, meaning that the S&P 500 is outpacing it by roughly nine percentage points.

“It’s premature to say these provide a good hedge. In our view it’s more of an area of speculation — when risk is coming off the market, you also see that in the crypto market,” said Lerner. “The market is looking at this more as a speculative area of the market and when you have a selloff, the speculative areas of the market tend to get hit.” — (c) 2021 Bloomberg LP