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Bitcoin tumbles 8% and other cryptos crash as hawkish Fed minutes whack risky assets | Currency News | Financial and Business News

Bitcoin price
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Bitcoin tumbled Wednesday through Thursday.

  • Bitcoin plunged more than 8% Thursday after the Federal Reserve released “hardcore” minutes on Wednesday.
  • Ethereum, Cardano, Binance, Solana and other cryptocurrencies were also in the red.
  • The Fed plans to scale back its support for the economy, causing problems for risky assets.

Bitcoin plunged more than 8% Thursday, and the cryptocurrency market was a sea of ​​red, minutes after revealing that the Federal Reserve may soon start scaling back its support for the economy.

Bitcoin, the world’s largest cryptocurrency by market capitalization, was 8.6% lower in the 24 hours to 4.50 AM ET on the Coinbase exchange, trading at $42,776. The sharp drop has put BTC more than 35% below the record high near $69,000 it touched in November.

Ethereum, the second largest coin, fell more than 12% to $3,336. Binance Coin is down about 8%, Solana is down about 13%, and XRP is down about 8%.

Cryptocurrency selling began on Wednesday after the Federal Reserve released “tough” minutes from its December meeting, which showed the US central bank could tighten monetary policy faster than previously expected.

In December, the US central bank said it would accelerate cuts in its bond purchases and indicated interest rates would rise in 2022 as it grapples with the strongest inflation in 39 years.

However, the minutes released on Wednesday show that policy makers can go further and faster than that, and the central bank may start selling the bonds it bought during the coronavirus crisis.

“An increase in the federal funds rate may be warranted sooner or at a faster pace than participants previously anticipated,” they said.

Read more: 9 Cryptocurrency Experts Tell Us Their Investment Prospects For 2022, From Bitcoin Price Predictions To Highly Convinced Cryptocurrency Picks And What’s Next For Regulation

The reaction in the markets was swift. Bond yields soared and cryptocurrencies and tech stocks — the two asset classes that have benefited the most from the Federal Reserve’s ultra-loose monetary policy — were sabotaged.

Analysts said higher bond yields are making cryptocurrencies and unprofitable tech companies look less attractive. Instead, investors are turning to companies with solid earnings and dividends, which can benefit from economic growth and generate good returns as inflation continues.

“We see bitcoin as akin to small-cap tech stocks,” said Shaun Farrell, Head of Digital Asset Strategy at Fundstrat. He said cryptocurrency is still in its maturity stage as a “store of value”.

Jeffrey Haley, chief market analyst at Oanda, said the “buy-everything trade” is in its final stages.

“Young puppies… nurtured in the central bank complex for eternal quantitative easing… will have to learn the meaning of the term ‘two-way price volatility,’” he said in a note.

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