On Monday, Bitcoin briefly fell below $20,000 as investors dumped risk assets following the Federal Reserve’s reaffirmation of its commitment to an aggressive tightening path.
According to Coin Metrics data, the world’s largest digital currency fell 5% from Friday’s close to an intraday low of $19,526 overnight, a level not seen since July 13. Ether fell to $1,423, its lowest level in a month, as did other major digital tokens. Bitcoin was last trading at $20,266 per coin.
The sharp drop in cryptocurrency prices coincided with a large sell-off in US stocks, which was triggered by Fed Chairman Jerome Powell’s stern commitment to halting inflation in a speech in Jackson Hole, Wyoming. The Dow Jones Industrial Average fell 1,000 points on Friday after Powell said the Fed will keep raising interest rates in a way that will cause “some pain” to the US economy. On Monday, stocks fell again.
“Bitcoin fell after Fed Chair Powell reiterated that the Fed will tighten policy to reduce inflation,” said Edward Moya, senior market analyst at Oanda. “Risky assets are under pressure as Powell’s anti-inflationary stance remains aggressive, even as it causes an economic slowdown.”
Bitcoin fell more than 3% last week, marking the third negative week in a row. The cryptocurrency is down more than 50% this year and is still 70% below its all-time high price of $68,990.90, which it reached in November.
The crypto market has been plagued by a number of issues, including the demise of algorithmic stablecoin terraUSD, which triggered a chain of events that resulted in the bankruptcies of lending platform Celsius and hedge fund Three Arrows Capital.