Bitcoin fell 9% on Friday as investors grew more cautious about risky assets.
This dramatic change in cryptocurrency prices highlights how digital assets are sensitive to market signals, macroeconomic indicators and general sentiment.
Bitcoin was trading at about $92,808.07 as of 6:57 am. Coin Metrics reports that the price of Bitcoin fell by a large amount on Friday morning, from over $102,000 24 hours earlier.
This week the cryptocurrency only just recently reached an all-time peak of $108,000 before it was wiped out by a massive wave of selling.
The volatility inherent in the crypto market is evident from this rapid change.
Fed Impact
Recent Federal Reserve signals about a lower number of rate reductions next year has rattled the markets and triggered a withdrawal in risky assets.
The shift in the monetary policy also affected equity markets, and this has been reflected through crypto assets.
Some of the gains made this year have been wiped out by the Fed.
Bitcoin was not immune from these effects, even though its price has more than doubled this year.
Price gains are attributed to factors like the release of exchange traded funds (ETFs) and Donald Trump’s election, who has been a proponent of cryptocurrency.
More than Bitcoin
Bitcoin’s abrupt decline has also affected other crypto currencies.
By 7:14 am, Ether had fallen by around 15% and XRP was down 17% in comparison to 24 hours earlier. ET.
The broad drop in the market highlights how interconnected the cryptocurrency market is and that digital assets are vulnerable to changes in investor sentiments and market trends.
Tesla shares, another major beneficiary of Trump’s victory, fell on Friday morning in premarket trade.
Other major names, such as Nvidia, were also lower in the session.
Powell’s comments on the Fed’s Bitcoin reserve policy
Bitcoins’ price was also affected by Federal Reserve Chairman Jerome Powell’s comments and hawkish tones on the possibility of creating a Bitcoin Reserve.
Powell said that during a Wednesday press conference, the US central banks has no plans to be involved with any government effort to stockpile Bitcoin in large quantities.
He said that after the Fed policy meeting, a two-day event. “We are not allowed to have Bitcoin.” The Fed did as it was expected to cut interest rates, but also indicated a more uncertain monetary policy in the months ahead.
Powell said that Congress should consider the issue of Bitcoin holdings, and the Fed is not interested in changing the law.
Powell made his remarks in response to discussions regarding a possible Strategic Bitcoin Reserve that could be implemented once Donald Trump becomes president.
This post Bitcoin plunges 9% amid market anxiety and Fed’s aggressive tone first appeared on The ICD
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