Bitcoin, ether drop as Fed move hits crypto

Cryptocurrencies come under pressure on Wednesday after another sharp rate hike by the Federal Reserve warn The economic pain from aggressive austerity continues.

The largest coin, bitcoin, fell 4%, narrowly falling below $18,000, nearing its last level for 2020. The second-largest coin, ether, continued to underperform, falling as much as 7.2%.

The Fed’s determination to raise interest rates to inflation-fighting levels at the expense of falling asset prices sent chills in global markets. Yields on shorter-dated U.S. Treasuries jumped, while longer-term rates fell, deepening an inversion of the bond curve seen as a harbinger of recession.

Such a backdrop provides the crypto market with a little respite. They have fallen from a record $2 trillion slump in 2021, a pit that has been blasted by projects like Three Arrows Capital hedge fund and Terraform Labs, whose co-founder Do Kwon is wanted by the authorities.

“If the Fed continues to tighten policy, unless it implements yield curve control to keep the curve positive, there will be more failures in the cryptocurrency system,” said Brian Pellegrini, founder of Intertemporal Economics. “Eventually there will be some very rich champions, but at the same time there will be blood on the streets.”

The MVIS CryptoCompare Digital Assets 100 Index fell this week, putting its 2022 loss at about 62%, compared with a 22% drop in global stocks. Correlations between stocks and bitcoin have risen to near-record levels, showing how the asset is being tossed by common macro factors.

Jamie Dimon, CEO of JPMorgan Chase & Co., reiterated his view that did not fuel sentiment in the digital asset market. skepticism Also called the coin a “decentralized Ponzi scheme”.

As of 9:50 p.m. in Los Angeles, the price of bitcoin was around $18,670. Ether traded around $1,260 and continued to take additional hits as an earlier rally sparked by hype surrounding its ethereum network upgrade subsided. Coins like solana and avalanche also saw losses.

Some traders may consider indicators like Bitcoin’s 14-day relative strength index to confirm that a rally is possible. The momentum indicator RSI is approaching oversold levels. But following the Fed’s combative performance, contrarian bets on riskier assets appear to be few and far between.

—Bloomberg writer Carly Wanna contributed to this report.