Bitcoin slumped after the fed minutes. Following the release of Federal Reserve minutes from its December meeting. Bitcoin fell precipitously. According to the minutes, policymakers expressed greater concern. About inflation and the possibility that interest rates would begin to rise. As early as this March, causing the price of bitcoin to plummet.
Bitcoin was down more than 4% to $44,200, after falling from around $46,000 shortly. After the Federal Reserve made the minutes public earlier this week. It had previously fallen from roughly $46,000.
Increased inflation readings and tightening labor markets, according to Federal Reserve officials. May force the central bank to raise rates “sooner or at a faster pace. Than participants had previously anticipated.” The minutes of the Federal Reserve’s monetary-policy committee’s meeting. On December 14-15 revealed that the bank may begin to decrease its $8.8 trillion balance sheet “very soon”. After raising the federal-funds rate to a historic high.
When Bitcoin fell, it coincided with a large drop in the value of stocks. With technology stocks bearing the brunt of the collapse. Just after 3 p.m. The Nasdaq Composite Index fell 2.7 percent to 15,190. Surpassing the broader S&P 500, which down 1.4 percent to 4,725. At the time of writing.
Bitcoin was not the only cryptocurrency to see its value plummet. As a result of higher interest rates and tighter banking regulations. Ethereum and Litecoin were also hit hard by the same factors. At the time of writing, the price of ether was down 4.6 percent to $3,640. Many other cryptocurrencies struggled, with Solana losing 6.3 percent of its value to $158. Cardano losing 5.4 percent of its value to $1.25. And Terra losing 7.4 percent of its value to around $80.
Bitcoin Slumped selloff shows it’s performing more like a tech stock
The recent decline in the value of Bitcoin is another another indication. That it is behaving more like a technology stock than. As an inflation-fighting store of value–or digital gold. Since its proponents claim–and that it is losing its appeal.
Bitcoin’s supporters say that because of its finite quantity of 21 million coins. It will not depreciate in value like fiat currencies, which are susceptible to inflation. And a loss of purchasing power as a result of deflation. In the near term, however, it has been unable to stand up as the Federal Reserve. Or other central banks reduce excess liquidity measures and prepare the markets. For higher interest rates this year, leading to a collapse in its value.
Other cryptocurrencies appear to be behaving more like emerging-tech bets. Than alternative assets, with their performance aligning. With that of the Nasdaq in the near term, according to the data.
In order to keep inflation from spiraling even farther out of control. Higher interest rates and tighter lending restrictions are implemented. However, as a side consequence, they tend to have a negative impact. On speculative assets as investors move their money to safer investments. As investors shift their attention away from technology and toward value. Energy, and other sectors that may fare better in an inflationary environment. The technology sector suffers.
Indeed, Bitcoin’s decline has corresponded with an increase in the yield on the 10-year Treasury note. Which has risen from 1.52 percent on December 31 to 1.71 percent at the moment.
If Bitcoin and other cryptocurrencies want to be considered legitimate alternative assets. They must first demonstrate that they are capable of acting in that capacity. The markets have thus far treated them as speculative.