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Bitcoin Drops Below $42,000 to Lowest Level Since September

Soegeefx AppsCrypto MarketBitcoin Drops Below $42,000 to Lowest Level Since September

Bitcoin continued a weeks-long drop on Friday, falling below $42,000 to levels not seen since September.

The largest cryptocurrency declined as much as 4.9% to $41,008, marking a tumble of about 40% from its record near $69,000 reached Nov. 10. Second-largest Ether dropped as much as 8.3% to its lowest level since Sept. 30. 

The retreat comes after minutes from the Federal Reserve’s December meeting, published Wednesday, flagged the chance of earlier- and faster-than-expected rate hikes as well as potential balance-sheet rundown.

“The Fed’s intention to reduce the balance sheet in Q1 2022 is the primary cause of this sell-off,” Fundstrat strategists said in a note Thursday. “Unfortunately, no immediate support looks likely ahead of September 2021 lows at $39,573, with breaks of that leading down to last summer’s May-July bottom.”

Bitcoin gained about 60% last year, outperforming other asset classes amid a narrative that included institutional adoption, inflation protection and investment diversification. It’s struggled in recent weeks, though, amid a volatile period for financial markets. Spiking inflation is leading central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.

Source: Bloomberg

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