Sudden crypto market drop sends bitcoin below $22,000

Bitcoin on Friday fell to its lowest level in more than three weeks, dipping below $22,000 amid a sudden crypto sell-off in early European trading. 

Bitcoin plunged from $22,738 to below $21,427.59 at 10:20 a.m. ET, according to CoinDesk data. Earlier in the morning, the cryptocurrency fluctuated between $21,500 and $22,000.

It comes shortly after the world's largest digital coin surpassed the $25,000 level for the first time since June following a rise in U.S. stocks.

Ether fell from $1,808 to $1,728 at the same time before staging a muted rebound. It had slipped again, falling further to $1,693.90 by 9:40 a.m. ET.

A specific cause for a drop at that time, which also sent Binance Coin, Cardano and Solana falling, was not immediately clear. 

"US equity markets have pulled back since Wednesday's release of the July Fed meeting minutes, the key takeaway being that the Fed likely won't be finished with rate hikes until inflation is tamed across the board, with no guidance offered on future rate increases either," Simon Peters, crypto market analyst at eToro, told CNBC.

"With the tight correlation between US equities and crypto in recent months I suspect this has filtered through to crypto markets and it's why we are seeing the sell-off. The trend has also perhaps been exacerbated by liquidation of long positions on bitcoin perpetual futures markets."

Citing Coinglass data, Peters said Friday had been the biggest liquidation of long positions on futures since June 18, also the date bitcoin reached its lowest price of the year around $17,500.

Bitcoin and ether ended Thursday in the red, but ether has surged more than 100% since mid-June as investors prepare for a massive upgrade to the ethereum network.