Bitcoin (BTC), other cryptocurrencies drop on hawkish Fed minutes

Bitcoin and other cryptocurrencies fell on Thursday as the minute minutes of the Federal Reserve’s December meeting hit global risk assets.

Bitcoin was trading at $ 43,225.10, down 2% from the previous 24 hours, according to data from Coin Metrics at 4:00 p.m. ET. At one point it sank to just $ 42,496, hitting the lowest level in more than a month.

Other cryptocurrencies also fell. Ethereum fell more than 5% to $ 3,426.03 while solana lost more than 3% to $ 151.98.

The cryptocurrency selloff comes after stocks tumbled on Wednesday following the release of minutes from the Fed’s December meeting in which the central bank indicated it would reduce its supportive monetary policy, including reducing the amount. of bonds you own.

The Fed also indicated that it may have to raise interest rates earlier than expected.

Meanwhile, the benchmark yield on 10-year Treasuries topped 1.7% on Wednesday.

Growth assets, such as technology stocks, tend to suffer when rates rise, as future earnings become less attractive to investors when returns are higher. That sentiment has trickled down to cryptocurrencies, which are considered riskier assets.

A representation of the virtual currency Bitcoin is seen in front of a stock chart in this illustration taken on May 19, 2021.

Given Ruvic | Reuters

“Overall, I think global markets have shown weakness in light of recent moves by the Fed to raise interest rates. So I think yesterday’s drop is quite correlated. We have seen the US markets fall. .US yesterday, and as a result, everyone else in the risky asset classes fared equally poorly, including crypto, “said Vijay Ayyar, vice president of corporate and international development at cryptocurrency exchange Luno.

“Specifically regarding Bitcoin and crypto, the last 4 weeks have seen weak price action due to lack of interest / demand, the holiday season, and potentially similar factors.”

Shares in Europe and Asia-Pacific also fell on Thursday.

Yuya Hasegawa, a cryptocurrency market analyst at Japanese bitcoin exchange Bitbank, said that bitcoin could fall further, potentially falling to $ 40,000, if upcoming December non-farm payroll data shows strong job growth.

“The downward pressure on the price is expected to continue until the market fully sets prices on tighter future monetary policy than expected,” Hasegawa said in an emailed note Thursday.

CNBC’s Ryan Browne, Eustance Huang, and Hannah Miao contributed to this report.

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