Cryptocurrencies lost momentum on Thursday, falling quickly after the outcome of Wednesday’s Federal Reserve Open Markets Committee meeting that provided a short -term boost to digital coins.
After briefly appearing to break away from risk-sensitive stocks, Bitcoin (BTC-USD), Ethereum (ETH-USD) and its crypto cohorts ended Wednesday’s whipsaw session in the red, along with Wall Street. The return indicates the correlation with equities is unlikely to end any time soon, especially with the Fed poised to raise interest rates in March.
Leading crypto units dropped at least 3% in early deals, with Bitcoin changing hands below $ 37,000 – not far from the week’s low spike of around $ 33,250. Investors are struggling to replace digital coins in the face of monetary and monetary policy that will be “less supportive of growth this year,” Fed Chairman Jerome Powell said Wednesday.
“Crypto prices over the past few months, along with growth stocks, have brought the hardest market bleeding,” CoinShares CEO Jean-Marie Mognetti told Yahoo Finance Live on Wednesday. He cited the uncertainty surrounding the Fed’s next moves as weighing on the sector.
The upcoming monetary tightening cycle is scrambling the outlook for crypto assets that benefit from lax monetary policy and lavish federal government spending. The risk aversion market pivot will continue to drive crypto prices in the near term, according to Mikkel Morch, executive director and risk management of crypto asset hedge fund ARK36.
Smaller cryptocurrencies that enable the layer-1 smart contract blockchain such as Solana (SOL1-USD), Terra (LUNA1-USD), Polkadot (DOT-USD) and Avalanche (AVAX-USD) have all dropped by no. at least 5%, normal for this class of assets as they sit higher on the risk curve of the typical investor.
“While Powell was really calm at the start of the press conference, he seems to have failed to offer enough reassurance to really reverse the tide of bearish sentiment that has held the markets since last week,” Morch told Yahoo Finance.
Crypto derivatives are sending a slightly bullish signal that the 8-hour funding rate remains positive, according to derivatives platform, Coinglass. That means that a small majority of speculators are expecting a bullish short -term result.
But Bitcoin’s fall since hitting a record high in November above $ 68,000 tells the true story. Meanwhile, a new Bitcoin futures-based exchange traded funds (ETFs), ProShares ’BITO, has fallen 46% since its peak on Nov. 9. It changed hands at approximately $ 23 per share in stocks. first deal Thursday.
Brett Harrison, president of cryptocurrency exchange, FTX.US – which closed a $ 400 million capital increase this week – told Yahoo Finance that crypto volatility is “par for the course.” But he cited a steady flow of venture capital and talent funding that could act as a leading indicator for the sector’s growth dynamics, which remains intact.
“As long as there is an ongoing intellectual shift from finance and computer jobs to crypto jobs, and pouring in money, people will want to build,” Harrison said. “They’ll generate value, and that will come back to the markets eventually.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.
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