Bitcoin Falls Back to $40K as Crypto Market Loses Nearly $100B in 24 Hours

After Federal Reserve Chairman Jerome Powell indicated that interest rate hikes should be undertaken “more quickly,” cryptocurrency markets remained dull as Bitcoin falls back to $40,000 on Friday. Powell also said that a 0.5 percentage point rate hike was “on the table” for next month.

The president of the Federal Reserve Bank of St. Louis, James Bullard, indicated on Tuesday that he expects interest rates to reach 3.5 percent by the end of the year.

Meanwhile, the Federal Reserve’s balance sheet reduction program finally got launched, which was another macro trigger. The effort to tackle forty-year record inflation, which is also expected to put pressure on stocks and risk assets, has been priced in for a long time but was not reflected in the data until now.

Bitcoin dropped to $40,145 from yesterday’s high of $43,000 as seen on Coinbase data, while the entire cryptocurrency market plunged to $1.88 trillion losing nearly $100B in 24 hours.

Fed Chair Jerome Powell’s comments added to the worry, implying that more crucial interest rate hikes are on the way in May. As a result, crypto traders remained cautious, with many pointing out that the week’s run to around $43,000 had not been followed by adequate volume, implying that its authenticity had been questioned from the start.

According to market analysts, the $40,000 barrier has emerged as a make-or-break milestone for Bitcoin, as its performance from there might determine whether the market enters another bullish or negative phase.

Alternative cryptocurrencies were also flying high in recent days, but have suddenly turned red, similar to Bitcoin. Yesterday, Ethereum was on the verge of breaking beyond $3,200. It was, however, denied at the time, and it currently struggles to stay over $3,000.

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