Bitcoin and other cryptocurrencies fell on Thursday as upbeat minutes from the Federal Reserve’s December meeting hit global risk assets.
Bitcoin was trading at $43,225.10, down about 2% from the previous 24 hours, according to Coin Metrics data as of 4:00 PM ET. At one point it fell as low as $42,496, hitting its 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% at $151.98.
The cryptocurrency selloff follows a drop in stocks on Wednesday following the release of the minutes of the Federal Reserve’s December meeting in which the central bank indicated it would restore supportive monetary policy, including reducing the amount of bonds it held.
The Fed also indicated that it may have to raise interest rates sooner than expected.
Meanwhile, the yield on the 10-year Treasury rose above 1.7% on Wednesday.
Growth assets such as technology stocks tend to take a hit when rates rise, as future earnings become less attractive to investors when returns are higher. These sentiments are filtered through cryptocurrencies, which are seen as risky assets.
Representations of the virtual currency Bitcoin are shown in front of a stock chart in this illustration taken on May 19, 2021.
Moin Rovich | Reuters
“Overall, I think global markets have shown weakness in light of the Federal Reserve’s recent moves to raise interest rates. So, I think yesterday’s drop is completely linked. We saw US markets drop yesterday and as a result,” said Vijay Ayar, Vice President of Corporate Development and International at Stock Exchange. Luno cryptocurrency, risk asset classes have been equally weak including cryptocurrencies.
“With regards to Bitcoin and cryptocurrencies specifically, the past four weeks have seen some 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, digital currency market analyst at Japan’s Bitcoin exchange Bitbank, said that Bitcoin could fall further, possibly as low as $40,000, if December’s non-farm payroll data shows strong job growth.
“The downward pressure on the price is expected to continue through to full market prices in the tighter-than-expected future monetary policy,” Hasegawa said in an email note on Thursday.
– CNBC’s Ryan Brown, Eustance Huang and Hannah Miu contributed to this report.