Cryptocurrency market capitalization is below 1 trillion USD

The digital currency market is on fire, as Bitcoin retreats to close to $18,600, near the lows of this year.

The price of Bitcoin - the world's largest digital currency - has dropped more than 6% since last night, retreating to close to $18,600 before rebounding slightly. Cryptocurrency market capitalization also fell by the same rate, to less than $1 trillion, according to CoinGecko .

Bitcoin has dropped more than 6%, approaching this year's bottom. Photo: Bloomberg

Soaring real interest rates are putting great pressure on a range of risky assets. Cryptocurrencies are no exception. Bitcoin's recent plunge has brought the digital currency closer to the low of $17,600 set in June, following the collapse of many crypto lenders and hedge funds.

"Macro issues are a very hard story to ignore and it will affect risky assets," Kevin Loo, head of investment at IDEG Asset Management, told Bloomberg. “Bitcoin is at just under $20,000, which has happened before and is likely to go even lower.”

Even so, the market remains optimistic about the upcoming upgrade of the Ethereum network. Some analysts expect this development to attract investment inflows into ETH and other digital assets.

“Bitcoin was at $3,000 during the crypto 'first winter', and if you measure between the two bottoms, you'll see the price trend is still bullish in the long term," Loo said.

The MVIS CryptoCompare Digital Assets 100 index of the largest tokens is down about 60% this year. Meanwhile, Bitcoin has lost more than two-thirds of its value from its peak near $69,000 in November last year.

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