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Bitcoin price

Bitcoin plummeted Wednesday and into Thursday

Bitcoin dropped more than 8 percent Thursday after the Federal Reserve published “hawkish” minutes on Wednesday.
Deeply in the red were Ethereum, cardano and binance coin as well as solana and many other cryptocurrencies.
The Fed will reduce its support of the economy, which could spell trouble in risky assets.

Bitcoin fell more than 8% on Thursday. The cryptocurrency market was in red after minutes revealed that the Federal Reserve could soon begin to reduce its support for the economy.

Bitcoin, the world’s largest cryptocurrency by market value, fell 8.6% in the 24 hours that ended at 4.50 a.m. ET on Coinbase, trading at $42,776 BTC dropped more than 35% to close to $69,000 in November, a record high.

Ethereum, the second-largest token, fell more than 12%, to $3,336. Binance coin slumped around 8%, solana dropped roughly 13%, and XRP was about 8% lower.

The crypto selloff began Wednesday, after the Fed released “hawkish” minutes from its December meeting. This showed that the US central bank could tighten its monetary policy more quickly than previously anticipated.

The US central bank announced in December that it would accelerate its reductions in bond purchases and signaled that interest rate would rise in 2022, as it struggles with the highest inflation in 39 years.

The minutes released Wednesday show that policymakers could go further and faster than expected. The central bank could even begin selling bonds it purchased during the coronavirus crisis.

“It may be warranted to raise the federal funds rates sooner or faster than participants had previously anticipated,” they stated.

Read more: 9 cryptocurrency experts share their investing outlooks in 2022. They range from bitcoin price predictions and high-conviction altcoin picks. What’s next for regulation?

The markets reacted quickly. Bond yields shot up and cryptocurrencies and technology stocks — two asset classes that have benefited the most from the Fed’s ultra-loose monetary policy — got trashed.

Analysts believe that cryptocurrencies and unprofitable tech companies are less attractive due to higher bond yields. Instead, investors are turning to dividend-paying companies that have strong earnings and can benefit from economic expansion and provide good returns if inflation stays high.

Sean Farrell from Fundstrat, head of digital asset management, stated that bitcoin behaves closer to a small tech stock. He stated that the cryptocurrency is still maturing and being used as a “store-of-value.”

Jeffrey Halley is a senior market analyst at Oanda. He said that the “buy anything trade” is dying.

“Young pups … nurtured at the central bank pool of eternal QE … will have to learn the meaning of the term ‘two-way price volatility,'” he said in a note.

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