The price of Bitcoin fell below $20,000 once more, as the Federal Reserve’s hawkish comments about inflation and the economic slowdown weighed on riskier assets.
On Tuesday, the largest digital token fell as much as 2.3% to around $19,723, while other cryptocurrencies such as Ether, Polkadot, and Dogecoin also fell. At one point, an index of 100 of the largest digital coins fell 2%. US stocks fell as well, with the S&P 500 falling as much as 1.5% in what is likely to be its third straight day of losses.
Riskier assets have struggled in recent days as traders mulled remarks from Fed Chair Jerome Powell, who reiterated the central bank’s willingness to continue monetary tightening even if it means risking an economic downturn.
The sell-off in riskier assets began on Friday when Powell stated that the Fed is now willing to let the economy suffer while fighting inflation. Macroeconomic headwinds will continue to weigh on cryptocurrencies, as inflation remains out of control and the Fed is unlikely to change course anytime soon, according to Vetle Lunde of Arcane Research.
“The macro backdrop will be a difficult landscape to navigate in the coming years,” he said.
The $20,000 level served as support for Bitcoin when it hit lows in recent months, though the cryptocurrency has risen in recent weeks. Many analysts regard it as a significant psychological threshold, with a drop below it potentially indicating further losses.
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