Bitcoin sank below $22,000 on August 19, after global stocks fell amid uncertainty over how aggressive the Federal Reserve would be in its effort to cool inflation with rate hikes interest
Bitcoin, the world’s largest cryptocurrency, has declined 8.7% to $21,443 over the past 24 hours, according to CoinDesk. The sell-off came after bitcoin briefly crossed $25,000 over the weekend for the first time since mid-June.
Crypto had received a boost from slowing US inflation. Traders felt that took some pressure off the Federal Reserve, which has been raising interest rates to control rising prices.
US stocks fell on August 19 and shares in Asia and Europe fell as Federal Reserve officials offered slightly divergent views on the pace of future interest rate hikes. The president of the Fed of St. Louis, James Bullard said on Aug. 18 that he favored a three-quarter point hike at the Fed’s next meeting in September. However, Kansas City Fed President Esther George said “the case for continuing to raise rates remains strong,” but added that there was a debate about “how quickly that has to happen.”
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Bitcoin and its peers should, in theory, trade independently of mainstream finance, but have proven to be largely correlated with other risk-sensitive assets such as stocks.
Craig Erlam, senior market analyst at Oanda, said that while the trigger for the bitcoin selloff was unclear, “the fact that it has barely recouped any of these losses suggests that the move has substance.” .
Erlam added that the break below $22,500 “could be significant if it holds, and the next key test is $20,000 again.” He added: “Crypto winter may not be over yet.”
Ether, the second largest token, is down 7.2% over the past 24 hours to $1,717. Smaller chips like solana and cardano also fell sharply.
Crypto-related stocks like Coinbase, Marathon Digital and Riot Blockchain fell 8.7%, 12.2% and 11.4%, respectively.
Write to Joe Woelfel at joseph.woelfel@barrons.com
This article was published by Dow Jones Newswires, a publication of the Dow Jones Group
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