Cryptocurrency prices are falling Thursday in reaction to the sharp market sell-off.
Cryptocurrency prices plummeted Thursday as investors looked to the near impact of the Federal Reserve’s interest rate hikes.
Bitcoin was down 5.1% to $36,925, well off its record high of $69,044.77 in November. Ethereum lost 3.1% to $2,753 and dogecoin was off nearly 1% to $0.129244.
‘Bitcoin is the Solution’
Over on Wall Street, the Dow Jones Industrial Average was down 1,051 points, or 3.1% to 33,009, while the S&P 500 lost 3.46% and the tech-heavy Nasdaq down 5%.
Cryptocurrencies have been moving in tandem with stocks, particularly the tech sector.
Michael Saylor, founder and CEO of MicroStrategy (MSTR) – Get MicroStrategy Incorporated Class A Report and a bitcoin evangelist, stuck by the cryptocurrency, tweeting “the pundits see the problem, yet proffer no solutions. #Bitcoin is the solution.”
MircoStrategy posted a first quarter net loss of $130.8 million compared with $110 million in the same period in 2021.
Investors fear recession after the Federal Reserve confirmed it is entering a period of drastic monetary tightening to curb inflation.
‘A Peculiar Situation’
The Fed lifted its Fed Funds rate by 50 basis points, to a range of 0.75% to 1%, its largest rate hike in more than two decades.
The central bank also confirmed plans to reduce its $8.9 trillion balance sheet, with $47.5 billion in sales starting on June 1 with a cap its monthly asset sales at $95 billion, comprised of $60 billion in Treasury bonds and $35 billion in mortgage bonds.
“The Fed now finds itself in a peculiar situation where it’s forced to implement aggressive policy tightening at a time when economic indicators are beginning to soften,” said Peter Essele, head of portfolio management, Commonwealth Financial Network. “The Fed has indicated its preference for a soft landing; however, if history is any indication, the Fed often misses the mark and things end with a thud.”
Essele added that “the performance of recent equity markets would suggest that investors aren’t too convinced the Fed can engineer a parachute landing this time around with the economy.”
