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Bitcoin fell below $22,000 on Friday.
Dreamstime
Bitcoin
sank to below $22,000 on Friday, following global stocks lower amid uncertainty over how aggressive the Federal Reserve would be in its effort to cool inflation with interest-rate hikes.
Bitcoin, the world’s largest cryptocurrency, has declined 8.7% to $21,443 over the past 24 hours, according to CoinDesk. The selloff came after Bitcoin briefly crossed $25,000 over the weekend for the first time since mid-June. The crypto had received a boost from a slowing of U.S. inflation. Traders felt that took some pressure off the Federal Reserve, which has been raising interest rates to tame rising prices.
U.S. stocks were headed lower Friday and shares in Asia and Europe fell as Federal Reserve officials offered slightly divergent views on the pace of future interest-rate hikes. St. Louis Fed President James Bullard on Thursday said he favored a three-quarters point hike at the Fed’s next meeting in September. Kansas City Fed President Esther George, however, said the “case for continuing to raise rates remains strong,” but added there was debate over “how fast that has to happen.”
Bitcoin and its peers should, in theory, trade independently of mainstream finance, but they have proved to be largely correlated to other risk-sensitive assets like stocks.
Craig Erlam, senior market analyst at Oanda, said that while the trigger for the Bitcoin selloff wasn’t clear, “the fact that it has barely recovered any of those losses suggests there is substance to the move.”
Erlam added that the break below $22,500 “could be significant if it holds, with the next key test once more being $20,000.’ He added: “The crypto winter may not be over yet.”
Ether,
the second-largest token, has dropped 7.2% over the past 24 hours to $1,717. Smaller tokens such as
Solana
and
Cardano
also fell sharply.
Crypto-related stocks such as
Coinbase
(ticker: COIN),
Marathon Digital
(MARA) and
Riot Blockchain
(RIOT) dropped 8.7%, 12.2% and 11.4%, respectively.
Write to Joe Woelfel at joseph.woelfel@barrons.com