Bitcoin slumps as market optimism fades after Fed meeting
Bitcoin slumps as market optimism fades after Fed meeting.
Bitcoin posted its biggest drop in nearly a month as optimism in financial markets faded after Wednesday’s Federal Reserve meeting. The largest digital currency fell as much as 8% to $36,639 on Thursday, its biggest intraday drop since April 11. Bitcoin rose 5.3% on Wednesday.
Ether fell as much as 7.2 percent on Thursday. Among some of the digital currencies that rose the most after the Federal Reserve raised interest rates on Wednesday, Avalanche and Solana fell as much as 11% and 7.3%, respectively.
Josh Lim, head of derivatives at New York-based brokerage Genesis Global Trading, said the market still needs to digest the impact of tightening monetary policy on all risk assets, and cryptocurrencies could also take a hit as their correlation with U.S. stocks rises.
The Federal Reserve announced on Wednesday that it would raise its benchmark interest rate by 0.5 percentage points and reduce its holdings of U.S. Treasury bonds and mortgage-backed securities starting in June.
Risk assets surged after Federal Reserve Chairman Jerome Powell said the FOMC was not actively considering a 75 basis point rate hike.
However, in an environment of rising interest rates, Bitcoin has not been able to materially break above the highs at the beginning of the year.
Bitcoin has remained largely range-bound for the past few months.
“Despite the weakening of Powell’s hawkishness, Bitcoin’s technical picture remains poor, failing to reclaim the $40,000 mark, hence the pullback,” said Teong Hng, CEO of Hong Kong-based cryptocurrency investment firm Satori Research. “Cryptocurrencies also fell after U.S. stocks reversed yesterday’s gains.”
Funds have also flowed out of the industry amid the faltering trend. According to data tracked by CoinShares, investors pulled about $120 million from cryptocurrency products last week, bringing the total outflow over the past four weeks to $339 million.