RIYADH: Bitcoin, the leading cryptocurrency internationally, traded lower on Monday, falling by 6.61 percent to $33,440 at 3:55 p.m. Riyadh time.
It is also its lowest since July 23, as it suffered losses from an all-time high of $69,000 last November by 50 percent.
Ether, the second most traded cryptocurrency, was priced at $2,207, down by 11.44 percent, according to data from Coindesk.
Bitcoin tumbled almost 9 percent on Monday to its lowest in six months as fears of a Russian attack on Ukraine saw riskier assets worldwide extend their sell-off.
The US State Department said on Sunday it was ordering diplomats' family members to leave Ukraine in one of the clearest signs yet that American officials are bracing for an aggressive Russian move in the region.
Fears of conflict pummelled shares across the world while bolstering the dollar and oil.
Nerves over the US Federal Reserve's two-day meeting, starting on Tuesday, added to the mix, with the central bank expected to confirm it will soon start draining the pool of liquidity that has supercharged growth stocks.
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also slumped.
"Bitcoin will face headwinds going back up until the macroeconomic conditions change," said Mark Elenowitz, president of Horizon, a firm that services securities exchanges.
"Generally speaking, when rates are hiked, we could see more sell-offs of seemingly risk-on assets like bitcoin."
US-listed cryptocurrency miners Riot Blockchain, Marathon Digital and Bit Digital slumped between 7.3 percent and 12 percent in premarket trading, while crypto exchange Coinbase Global dropped 7.8 percent.
Switzerland’s largest bank, UBS has warned of a crypto winter where prices crash and may not recover for years.
The bank’s analysts, led by James Malcolm recently explained in a note to clients several reasons why cryptocurrency may lose its attractiveness to investors this year.
The UBS analysts detailed that the Federal Reserve’s interest rate hikes are set to reduce the appeal of cryptocurrencies, such as bitcoin for many investors who see the asset class as a good alternative store of value.
The analysts added that if central banks move to get a handle on inflation, investors may not be holding bitcoin as protection against rising prices.
They noted that government stimulus was a major factor boosting the prices of cryptocurrencies in 2020 and 2021.
The Fed is also expected to raise interest rates several times this year.
JPMorgan CEO Jamie Dimon recently said that the Federal Reserve might have to raise short-term interest rates more than four times this year.
Goldman Sachs also expects the Fed to raise interest rates four times this year.
“The Fed is going to have to hike many more times than what the market expects,” Wharton’s finance professor Jeremy Siegel said earlier this month.